November 11, 2014

There Seems To Be A Big Bubble Blowing

A report from Radio New Zealand. “Auckland home-owners are already wanting to renegotiate loans or borrow more following the release of Auckland Council’s new property values, mortgage broker Bruce Patten says. Patton told Morning Report many homeowners called yesterday, wanting to use their new valuation to raise more capital for renovations, and new cars and boats, and he thinks there will be more inquiries to come. On average the site gets around 90,000 daily page views, but yesterday there were nearly 1 million, the council says. Mr Patten warned the valuations were generally ’sight unseen’ and an indication only of value. ‘The price is what someone’s prepared to pay for it today,’ he said.”

The Australian. “Auction clearance rates have slowed across the country as ­listing numbers grow and housing supply threatens to overtake ­demand. Sydney experienced a clearance rate of 75.5 per cent — its lowest since the first week of July — while Melbourne recorded 71.6 per cent at the weekend, Australian Property Monitors said. RP Data recorded a clearance rate of 45 per cent in Brisbane, 61.3 per cent in Adelaide, 50.6 per cent in Canberra and 56.3 per cent in Perth.”

“It wasn’t the prestige suburbs keeping the market afloat. Sydney’s inner-city and eastern suburbs produced ‘underwhelming’ clearance rates of less than 70 per cent at the weekend despite their price growth and popularity, APM chief economist Andrew Wilson said. Sydney can expect a record November, with more than 5000 auctions expected to be held this month — the highest number ever recorded, according to APM.”

Reuters on Sweden. “Having slashed rates to zero to fight the risk of deflation, top Swedish officials are now in a quandary over how to rein in borrowing and house price rises without sending the real estate market into a downward spiral. In Stockholm’s frenzied housing market, buyers make multi-million crown offers to snap up flats they may only have seen in photographs. And cranes and scaffolding are common sights. ‘We don’t think it will crash badly,’ said Peter, a 47 year-old investment advisor, who with his wife has just bought a house in Stockholm for around 12 million Swedish crowns ($1.62 million). ‘It might stop going up for a while, but over the longer term we expect it to go up.’”

Business World in the Philippines. “The majority of Metro Manila condos are in Makati — about 80%. From what started as P40,000 per square meter for initial sales of Makati condos in 2001, the price per square meter of new condos in Makati now range from P150,000 to about P220,000. But is there a vibrant enough market for reselling? Or even for rentals? Owners of older condos have a difficult time trying to sell units, or even rent them out, in the face of declining prices, and little demand for old units. Is there a glut?”

“Near the Makati Fire Station is a new condo complex 59 storeys high, dense with 74 units per floor, composed of one- and two-bedroom units from 20 sqm to 36 sqm each unit. Further down is a four-tower condo complex, 41 storeys high sitting on top of a five-floor commercial podium, 50 units per floor of one- and two-bedroom units, 22.25 sqm to 39.7 sqm each unit. There seems to be a big condo bubble blowing in Makati.”

The Hindustan Times in India. “There is good news in store for Mumbaiites who plan to rent homes in the near future — there has been a marked reduction in rentals of residential properties across the city. While the rents for smaller homes have dipped by 10%, those of premium properties have fallen by 35%, experts from the housing sector said. Real estate investors, who are saddled with vacant flats because of low demand from buyers, have made these apartments available for tenants. ‘The older rates were inflated. What we are seeing now is a correction in prices,’ said Prakash Rohera, CEO, Kkarma Realtors.”

The Strait Times on Singapore. “Landed homes are taking more of a hit than apartments in the lacklustre property market, with prices falling and demand drying up. The price index for landed property has fallen 5.1 per cent over the past four quarters, well in excess of the 3.3 per cent slide in the non-landed index, according to the Urban Redevelopment Authority. ‘Our agents are also suffering. We have taken steps to offer some discounts and, hopefully, buyers will see the value. Where (else) can you get a new landed house with a park or sea view?’ said Mr Sam Chong, senior manager at Sunway, which developed Avant Parc in Sembawang.”

From China Daily. “Real estate companies listed on the mainland bourses saw a surge in inventories during the third quarter of the year, a report said. During the first three quarters of this year, about 60 percent of China’s top 50 realty developers by sales revenue reported declining average prices of sold properties. As many as 26 developers said the average price of sold properties dropped less than 10 percent year-on-year, and six developers said their property price dropped more than 10 percent, according to CRIC. ‘Developers will further cut prices and give better offers to attract buyers to meet the revenue goals for 2014,’ said Wu Huimin, director of residential property at real estate company DTZ East China.”

The Gananoque Reporter in Canada. “The Chinese industrialists who purchased the Eagle Point Winery and its luxurious modern castle on the river less than three years ago have defaulted on their loan and the ownership of the properties have reverted to the former owner. When Chinese industrialist Du Zhongyi of Wuhai, China, purchased the mansion and winery in March, 2012, the transaction was heralded as the start of Chinese cash flowing into the Thousand Islands.”

“Du announced plans for a 80-home subdivision on the winery property, which would be marketed to Chinese millionaries who wanted a place in Canada. Du, a Chinese coal producer, was rumoured to have paid $20 million for the Eagle Point properties. If accurate, that means that Du left about $6 million on the table when he walked away from the deal.”

Bits Bucket for November 11, 2014

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