Financing is tight and European developers are responding to a smaller pool of buyers by cutting prices to unload their holdings, reports Mark Scott for Business Week.

Home prices are experiencing steep drops and foreign currencies are now depreciating. Properties in emerging markets may cost as little as an eighth of the average U.S. home and these countries also have the potential for healthy economic growth.

But world banks still charge premium interest rates and require large down payments that could deter some potential buyers. Some analysts project real estate to further depreciate in 2010.

Market watchers suggest looking at properties in countries with good long-term growth. It is also advised that buyers should get financing from multinational banks to limit chances of domestic financial problems. It is also noted that places with steady rental income from tourists have less risk than places that rely on local tenants.

• iShares FTSE EPRA/NAREIT Developed EU Index (IFEU): down 6.7% year-to-date

Max Chen contributed to this article.

Investment in the housing market around Europe, most notably by United Kingdom denizens with equity, has left many buyers with little or sometimes no capital gains as property prices in Europe plummet, reports Anna Mikhailova for Times Online.

Many developers ran out of money and abandoned unfinished properties. Some more dubious overseas developers even conned gullible foreign investors into paying for projects that were probably not intended to be built in the first place.

Development in areas like emerging Europe were hit hardest. In Calabria, southern Italy, investors saw houses sequestered by local police after the developing region was halted under environmental reasons. Spain has also been rather unfortunate for foreign home owners with collapsing property companies, arbitrary government rules and plain fraud.

The new report issued by Mintel International, Consumer Reaction to the Credit Curnch-UK, seeks to answer questions regarding U.K. consumers and stress on market segments, according to Marketwire. It is seen that the credit crunch will create a prolonged recession, with the United Kingdom experiencing rising unemployment, repossessions and insolvencies. But falling inflation and base rates actually have been to the advantage of mortgage holders.

It is difficult to find the necessary debt financing for potentially $67.5 billion of equity in European Commercial real estate market deals, as stated by Global Real Estate Monitor for GlobeSt. Activity in European commercial real estate will probably be more temperate this year because of ongoing European economic troubles.

• iShares FTSE EPRA/NAREIT Developed EU Index (IFEU): down 20.8% year-to-date

Max Chen contributed to this article.

With a growth figure of 0.0 is below even the modest estimate of 0.2. With a falling housing market, low consumer confidence and inflation out of control, the “R” word is looming.

Emily Flynn Vencat for Associated Press reports that the economists are calling for a recession, and data shows the British economy is doing worse now than it did during the second quarter.

The construction sector has been particularly hard-hit in the wake of Britain’s worst housing crash in 30 years.

• iShares MSCI United Kingdom (EWU), down 21% year-to-date
• NETS FTSE 100 (LDN), down 12.9% since April 10 inception

U.K. property stocks have fallen by more than half since Britain introduced real estate investment trusts (REITs) in January 2007. A glut of empty space in London could lead to a property recession, reports Peter Woodifield for Bloomberg.

Prices for offices in London have dropped 25% since last August and rents are declining for the first time in four years. Developers have been working on 160 trading floors of office space, with around 120 more due to be finished in 2010 – the worst timing possible.

• iShares S&P World ex-US Property Index Fund (WPS): down 25.5% year-to-date; 10.2% in the United Kingdom
• SPDR Dow Jones Wilshire International Real Estate (RWX): down 22.4% year-to-date; 13.4% in the United Kingdom
• iShares FTSE EPRA/NAREIT Global Real Estate ex-US Index Fund (IFGL): down 25.8% year-to-date; 11.2% in the United Kingdom
• iShares FTSE EPRA/NAREIT Europe Index Fund (IFEU): down 15.9% year-to-date; 36.6% in the United Kingdom

The Belfast region of Ireland is especially hurting from the recent credit crunch, and the economic growth rate has slowed to an estimated 1%. Last year, the province was expecting an economic revival of sorts, as the Catholics and Protestants declared peace, reports Colm Heatley for Bloomberg.

United Kingdom home prices fell as July consumer confidence fell to an all-time low as the country borders on a recession, says Brian Swint for Bloomberg. Average home values dropped 8.1% from the previous year. Falling retail sales, dropping home values, high food prices and credit tightening are weighing on the economy and real estate ETFs.

ETFs that are feeling the pain:

• iShares S&P World ex-US Property Index Fund (WPS): down 20.6% year-to-date; 10.2% in the United Kingdom
• SPDR Dow Jones Wilshire International Real Estate (RWX): down 16.4% year-to-date; 13.4% in the United Kingdom
• iShares FTSE EPRA/NAREIT Global Real Estate ex-US Index Fund (IFGL): down 20.5% year-to-date; 11.2% in the United Kingdom
• iShares FTSE EPRA/NAREIT Europe Index Fund (IFEU): down 13.5% year-to-date; 36.6% in the United Kingdom