What Our House Price-Dominated Society Deems Failure
A housing bubble report from around the globe. Aeon Magazine, “Keeping a woman is common among powerful Chinese men. A study by the Crisis Management Centre at Renmin University in Beijing, published this January, showed that 95 per cent of corrupt officials had illicit affairs, usually paid for, and 60 per cent of them had kept a mistress. Local estate agents target provincial officials and businessmen looking to put their money into Beijing’s property bubble, and the men fill up the apartments, bought as investments, with their women. ‘Half of the apartments are empty,’ Shanshan explained. ‘And the other half are full of girls.’”
Want China Times. “Wenzhou’s banking authorities confirmed rumors of 15,000 houses in Wenzhou nearing foreclosure after surveying 42 financial institutions. It has assured the public that “the situation is under control,” though shaking guarantee companies might not second the opinion, the Shanghai-based Jiefang Daily reports.”
“Wenzhou banks, as of the end of July, reported only 580 cases of foreclosed houses, and 2,584 houses with non-performing loans (NPLs). Of the 580 cases, 183 involved mortgages, and 397 involved mortgages with ‘collateral plus guarantees,’ said the report. Nosedives in the Wenzhou property market of up to 50% have forced some property buyers to stop making payments to the lenders and drop their guarantees to companies as their mortgages have exceeded the property’s market value. Many have literally abandoned property.”
Free Malaysia Today, “The property ‘cooling down’ mechanisms to be implemented by the Johor government to slow down foreign property ownership in the state will severely affect foreign direct investment (FDI) inflows, said a well-known developer. IJM Land, CEO Soam Heng Choon said foreigners will not stop buying properties in Johor, given Iskandar Malaysia’, development is a major property buying booster, but will definitely slow down their investment participation and dampen buying sentiment.”
“He said there are many high-end property developments that are currently undertaken in Johor — not to attract the locals but merely to cater to the evergreen foreign demand, especially from Singaporeans. He also questioned the relevance of the state government’s approvals to all the high-end projects, if it wants to implement the cooling down measures. ‘I think the state government must ask themselves, if they want to cool down the market for foreign buyers, then why do they allow more high-end projects? The fact is that for higher-end properties in Malaysia, we still need foreign buyers to come and support us, especially for properties over RM1,000 per sq ft,’ he told The Malaysian Reserve.”
Stuff New Zealand. “First home buyers, shut out of the market by new restrictions to lending rules, are better off not owning a home at all rather than purchasing one to find it’s no longer worth what they’ve paid, Prime Minister John Key says. ‘All of us who own a house, either want its value to be maintained, or to slowly rise. What we actually don’t want, even if we think we want it, is for house prices to rise rapidly. The reason for that is that creates a bubble, eventually the bubble bursts and the market collapses and it causes all sorts of very long term problems.’”
“He said some first home buyers could still borrow with a high loan-to-value ratio, but there were risks involved with that. ‘If you’re a first home buyer that… buys a home for $400,000 and then the next week it’s worth $250,000, for the next decade you’re paying off the $150,000 of equity you no longer have.’”
The Sydney Morning Herald in Australia. “It is a worldwide phenomenon called ‘Generation Rent’ - and it has landed in Australia. A new report has found that permanent renting is becoming a way of life for Australians of all ages. Miranda Pade thinks she would have to move out of Sydney to afford her own home. Sydney’s median house price of $640,000 is beyond the means of most people in their 20s, especially if they do not have a partner or family to help them financially.”
“‘It’s unclear to me at the moment where I’d get the deposit,’ said the 26-year-old, who rents in Summer Hill while studying for her master’s degree. ‘You’d need at least $100,000 and who has that kind of money?’”
The LA Times on Brazil. “Over the last year, the center of South America’s largest city has been markedly transformed, with nearly 50 abandoned buildings occupied by squatters from Brazil’s many sem-teto, or roofless, movements. The occupation protests at the buildings, where red flags hang from windows, are meant to pressure the government to provide adequate housing and give working families a place to live.”
“In both rich and poor neighborhoods of Sao Paulo, a metropolis of 11 million, property values have more than doubled in the last four years, leading to increased housing costs for those least able to afford them. In the seedier parts of downtown, a tiny one-bedroom apartment overlooking scenes of drug use and prostitution costs $450 a month; meanwhile, the minimum wage is $310 a month.”
“‘There will be an explosion of occupations over the next few years,’ predicts Guilherme Boulos, national coordinator for the MTST, a larger sem-teto organization,who met with President Dilma Rousseff during a wave of economic and social protests in June. ‘We told her the only way to create a sustainable housing policy in Brazil is to stop the rise in housing prices.’”
The Nanaimo Bulletin in Canada. “Housing experts say progress on Nanaimo’s new conference centre hotel has put the city on the cusp of a real estate revolution. Sellers plan to adjust property descriptions to appeal to the Asian market and contact hotel owner SSS Manhao to offer free tour services. ‘They are already coming and a lot of properties, especially high-end properties, are being sold to Chinese buyers … but when [there are] 70,000 … think about it – that’s basically the population of Nanaimo more or less,’ said Victor Kiritchenko, a real estate agent with Re/Max Nanaimo. ‘It will bring your market up enormously.’”
The Spectator in the UK. “Now that the middle class squeeze has become my sujet du bore at the fancy north London dinner parties I attend, I was interested in Saturday’s New York Times piece about what foreign billionaires are doing to our insane property prices. One statistic really stuck out: An astonishing £83 billion worth of properties were purchased in 2012 with no financing — all cash purchases. That’s $133 billion.”
“As Charles Moore once observed, the London property market is the world’s largest money-laundering operation. How, I wonder, does this benefit Londoners, except for the increasingly small group of wealthy property owners? It also strongly resembles a bubble, which is why I have little confidence in George Osborne’s economic policy and why talk of a recovery reminds me of those spoof Onion headlines from 1929. ‘Stock Market Invincible: ‘Buy, Buy, Buy!’”
“There’s been an exodus of middle-class Brits from London this century, but it can’t all be attributed to oligarchs pushing up prices; allowing parts of the city to become dominated by poor, often unskilled immigrants from developing countries has also raised the costs of failure (or what our house price-dominated society now deems failure). This is not to blame anyone; neither the rich Russian nor the poor Bengali immigrant working every hour God gives for his family is at fault for the drastic change of our city, but they’re part of the crummy game we’re all forced to play.”
