August 22, 2013

Now They Are Thinking To Sell

Some housing bubble news from around the globe. Bloomberg on the UK, “Chancellor of the Exchequer George Osborne’s plan to boost the U.K. housing market is winning his Conservative Party votes at the risk of creating a property bubble, economists say. Help to Buy is designed to let cash-strapped buyers purchase a home with a deposit of as little as 5 percent of the value of the property. ‘It’s political genius but economic lunacy,’ said Stewart Robertson, an economist at Aviva Investors in London. ‘Have we learned nothing? You can already use language like ‘booming’ about the housing market. It may win you votes, but at what cost?’”

The Irish Independent. “Some family homes in desirable areas of Dublin have shot up in value by around €100,000 over the past 12-months, according to Brian Dempsey, from agents Douglas Newman Good. Viewings of properties are attracting up to 60 people and scores of requests for information online, said Dempsey, from agents Douglas Newman Good. ‘I haven’t seen anything like that since 2006,’ said Mr Dempsey of the volume of prospective buyers at a house viewing of a four-bed semi in Glenomena Grove, Booterstown. ‘We put it on at €545,000. My first bid was above the asking price.’”

The Globe & Mail in Canada. “An increasing proportion of people are choosing to rent condos in Toronto rather than buy them, driving up rents while sales slide and prices stall. But the large number of new condos that are coming on stream is weighing on the rise in rents in the city’s inner core. The central bank has been warning about the potential dangers of oversupply as the number of unsold units has climbed above 19,300. Sales have plunged amid the concerns. One Toronto developer, who declined to be named, said all things considered he thinks the price of new condos are down 15 percent.”

Reuters on Singapore. “New private home sales in Singapore fell by around three quarters in July from the previous month, hurt by new cooling measures that capped the amount of loans relative to monthly income. The Monetary Authority of Singapore said it was concerned about rising household debt and said an estimated 5-10 percent of borrowers had ‘probably over-leveraged on their property purchases’ based on their total debt service payment ratio of more than 60 percent of monthly income.”

The Standard on Hong Kong. “Frenzied speculators who snapped up subdivided shops late last year are now caught between a rock and a hard place, as they are experiencing difficulty securing financing to complete their purchases, or finding new buyers to take the units off their hands amid the market downturn. ‘A lot of owners have failed to resell the stores because of the tightened mortgages. Perhaps 30 to 40 percent of them will eventually choose to abandon the deals,’ said investor Yip Yiu- cheung, who bought several shops in a hotel.”

From China Daily. “China’s economic slowdown is likely to contribute to weakening credit profiles for many of the country’s major companies, according to Standard & Poor’s Ratings Services. ‘We believe the financial strength of the majority of corporates in our survey will weaken further in the next 12 months,’ said S&P credit analyst Christopher Lee.”

“52 Chinese companies were downgraded in the first seven months of this year, more than the cumulative volume over the past seven years. ‘The downgrades of city investment bonds were closely related to the weakening fiscal status of local governments and less policy support,’ said Li Shi, author of the China Chengxin International Credit Rating Co report.”

The Canberra Times in Australia. “Valspar, one of the world’s biggest makers of home paints, has warned its US investors that an expected recovery this year in the Australian residential housing market had failed to materialise, with the economically vital property sector getting worse. Paint sales are a good indicator of the strength of the residential property sector, especially new housing construction, and also gives an insight into the current mood of home owners as purchasing paint is one of the cheapest forms of updating or renovating a room.”

“‘We expected some recovery in the residential housing market in Australia. That has not happened. In fact, it’s possible that that market has gotten worse as the year has progressed,’ said Valspar CEO Gary Hendrickson.”

From in New Zealand. “Hopeful first-home buyers are likely to be stuck renting for longer, with their chances of securing their dream home officially slashed in half. Yesterday the Reserve Bank announced long-awaited new rules on home loans - and they’re harsher than expected. Starting from October 1, banks will be forced to limit mortgages with loan-to-value ratios (LVRs) of over 80 per cent. That will effectively halve the amount of low-equity loans banks can approve. Borrowers looking for a house at the national median price of $385,000 will now need to stump up a $77,000 deposit. In the overheated Auckland market, that figure climbs to a whopping $110,000.”

“‘Seventy per cent of first home buyers save a deposit of less than 20 per cent to get a mortgage,’ housing spokesman Phil Twyford said. ‘Most of those will now be shut out of the market or need to save for years to come.’”

From Reuters. “Foreign investors, who rapaciously scooped up U.S. real estate during the 2007-2009 recession, are backing away from the same markets they so eagerly jumped into a few years ago. Real estate is no longer the bargain it once was for foreigners. That is discouraging new sales, while many foreigners who already own property - especially those who bought strictly as investment - are turning into sellers.”

“About 45 percent of Miami’s real estate is owned by foreigners, said Brigitte Lina Lombardi, an associate at Keller Williams Elite Properties, and home prices there gained over 14 percent year-over-year in May. ‘About 25 percent of foreign investors who bought in Miami between 2009 and 2012 are not purchasing anymore because of the increase in price,’ she said. ‘Now they are thinking to sell.’”

Bits Bucket for August 22, 2013

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