The Housing Bubble

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The Guardian reports from the UK. “The control of plans for tens of thousands of new homes in London is now in the hands of foreign investors who are increasing their grip on the capital’s prime property assets, figures obtained by the Guardian have revealed. Sites for close to 30,000 homes are owned by just 10 investors in Hong Kong, China, Malaysia, Australia, Singapore and Sweden, sparking warnings from politicians and housing industry experts that too many are being built to act as ’safe deposit boxes’ for international investors rather than for Londoners in housing need.”

“Tim Craine, director of Molior, a residential property research consultancy, confirmed the influx of Asian money was causing a surge in the number of homes being built but added: ‘They are being built at the wrong price. A one-bed flat for £1m is not going to solve anyone’s housing crisis.’”

The Irish Independent. “The spectre of long queues out the door returned in 2014. One house buyer, Ciara Cosgrove, spoke to Weekend Review earlier this year about heading out to view a house on a wild, stormy night expecting to be the only interested party to brave the elements. When she got to the address, there were 18 other couples ahead of her. ‘We’ve seen prices jump up all the time. A place that was €250,000 one week is valued at €260,000 the next. It’s like the Celtic Tiger all over again,’ she said.”

“Field reports from estate agents were redolent of the years immediately prior to the bubble bursting. ‘I showed a two-bedroom apartment at The Grange the other day,” said Brian Dempsey of Douglas Newman Goode estate agents. ‘And there were 52 people for that first viewing. I went back into the office and mentioned it to my colleagues as it was such a huge number, yet somebody else had shown a property that morning and 65 people had turned up for that.’”

“Dr Conor Skehan is one of the country’s foremost authorities on housing, so it came as something of a shock when he revealed he would rather stay renting than become a homeowner. With property prices spiralling upwards in Dublin, he had this to say: ‘I’m the chairman of the Housing Agency and I will never buy a piece of property again. I rent. We’ve completely lost connection between rental values and market values in Ireland and that still has to sink into people’s minds.’”

The Hamilton Spectator in Canada. ” The Bank of Canada said last week the country had showed signs of a ‘broadening recovery.’ However, the bank’s statement offset the positives by pointing to potential threats: weakening oil prices that drive down inflation and the significant risks of high household debt accumulated during years of low borrowing rates. The basic logic behind low rates is to encourage people to gather debt when the economy is weak, said McGill University economics professor Christopher Ragan, who has worked at the Bank of Canada.”

“He added, however, that monetary policy is a ‘pretty blunt instrument’ that can’t control those who borrow too much. ‘Some people have too much debt, but not everybody,’ Ragan said. ‘Some firms probably have too much debt, but not all firms. And monetary policy just can’t address that issue.’”

First Post on India. “In an unbelievable discount offer to beat slowdown blues, realty firm Supertech yesterday claimed to offer a free add-on studio apartment with the purchase of a luxury flat, but ‘conditions apply’ like all such schemes. o far, some realty developers have offered freebies like cars, ACs and other household items, but this one beats all such discount games that real estate companies come up with to lure buyers in a sluggish market. ‘In order to boost sales, Supertech announces buy one get one free offer on one of its residential project Capetown located in Noida. The offer is available only for the top floor apartment buyers in ‘Cape Crown’ of Capetown Project,’ the company said.”

“The project ‘Capetown’ is spread over 50 acres comprising 7,000 housing units. Supertech is currently developing over 90 million sq ft. The company has a presence in Noida, Greater Noida, Gurgaon, Meerut, Moradabad, Haridwar, Rudrapur, Ghaziabad and Bangalore.”

Nikkei Asian Review on China. “Two Chinese municipal governments have made it clear that they will not guarantee new debt issued by affiliated investment companies, removing an implicit backstop that has generally encouraged reckless infrastructure spending. The western Chinese city of Urumqi said Dec. 17 that a 1 billion yuan ($160 million) bond sale by a wholly owned financing vehicle would be canceled to protect investors. The proceeds were supposed to fund road construction, but the city saw little prospect of the project generating enough income to repay investors without government aid.”

“Subjecting municipal borrowers to some market discipline will likely help curb their enthusiasm for the kind of big-budget projects that show no regard for financial viability. This will have consequences for the national economy. Local infrastructure investment, an important driver of growth, is certain to lose steam in the coming years. As of Wednesday, no local governments had explicitly said how it would treat already-issued bonds. Saying they were not guaranteed would surely provoke opposition from the financial institutions that lend to these vehicles.”

The Sydney Morning Herald in Australia. “With the federal government fore­casting a $9 billion shortfall in ­revenue over the next two years as iron ore plunges to new five-year lows, the view of China from Australia is one of a ­country struggling to maintain the growth that turned it into a ­economic superpower. Shadow banking, ghost cities, ­slumping property prices, a ­manufacturing slowdown and debt defaults are just some of the ­headwinds that threaten the world’s second-largest economy.”

“Data from the National Bureau of Statistics showed that home prices fell for the seventh consecutive month in November. It has particularly hurt demand for Australian iron ore, as residential ­property accounts for 24 per cent of steel consumption in China. ‘From Australia it feels like China is actually having some sort of hard ­landing,’ Credit Suisse analyst Damien Boey said. The ruling Communist Party of China has to be very careful how it balances the huge capacity for fixed asset investment and consumption. ‘It’s like asking Australia to stop being a consumption and mining ­economy, we can’t do that overnight either,’ Mr Boey said.”

The New Zealand Herald. “The world economy enters 2015 at a fork in the road. One track leads to the self-sustaining vigorous recovery that policymakers have sought in vain since the financial crisis erupted in 2007. The other track leads back towards recession. Problems that have been stored up since 2008-09 can be contained no longer. Trevor Greetham, director of asset allocation at Fidelity Solutions, says the plunging oil price could prompt ‘credit stress.’ This would affect governments, such as Russia, Venezuela and Iran, that can only balance their books if the oil price is at US$100 a barrel or more. And it would affect the shale gas sector in the US, where much of the investment has been financed by high-yielding but risky junk bonds.”

“As the Bank of England points out in its recent Financial Stability Review: ‘As US oil and gas exploration firms account for 13 per cent of outstanding debt in US high-yield bond markets, an increase in the perceived or realised credit risk in this sector could lead to sales by investors and potentially illiquidity in the broader high-yield market.’ In other words, shale could be the next sub-prime.”

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The Forum News Service on North Dakota. “If 2011 was the year of the oil boom, 2014 could arguably be considered the year of Dickinson’s building boom. Months of pent-up demand for development – and for housing, in particular, as rent prices continue to rival those in much larger metropolitan areas – are expected to finally ease next year, as more private projects take off, said Community Development Director Ed Courton. The sudden drop in oil prices, which have fallen 40 percent since June, has shaken many investors and leaders in the Bakken. But Cooper Whitman, executive director of the Dickinson Chamber of Commerce, like Courton, said the slowdown likely won’t affect development in Dickinson in the long term.”

“Businesses aren’t looking to pull away from Dickinson, he said, because they understand that the oil slowdown is just temporary. ‘They’re not coming for the peak of an oil boom,’ he said. ‘They’re coming for the sustainable community that we’re building.’”

The Houston Chronicle in Texas. “The collapse of oil prices in 2014 has made it difficult for economists, both public and private, who until recently assumed oil would only drop to around $85 a barrel based on greater supply and less demand. Almost none expected prices to touch $54 a barrel, as they did this month, and now all assumptions are in question. The effect on the Texas and Houston economies is a matter of intense debate, but under no scenario will it be positive. The oil and gas industry is responsible for between 11.7 percent and 13.5 percent of the economic activity in Texas last year, depending on the analyst.”

“Barclays warned that the Texas housing market correlates with oil prices and therefore could take a major hit if oil prices stabilize at current levels. Offshore driller Transocean has announced the shutdown or sale of 10 rigs, and Houston-area companies that build well equipment are bracing for order cancellations. Halliburton CEO Dave Lesar has announced more layoffs are coming next year. ‘We will not be immune to market conditions, and right now it looks like 2015 is going to be a tough year,’ Lesar said in an email to employees. Quite a few roughnecks and field engineers will soon be out of work and packing their pickups to return to Houston. For them, 2015 could be very hard.”

The Arizona Republic “Floyd Scott, president of Century 21 Arizona Foothills, which has two of its seven Valley offices on the west side, offered a bright outlook based on low interest rates.The $150,000 to $225,000 market is hot as jobs continue to expand, and retired and second-home buyers are back in the market, he said. ‘The only negative might be the Canadian buyer, as oil prices and currency valuations might slow them down this year,’ Scott said.”

“David Friedman, branch manage for the West Valley office of Russ Lyon Sotheby’s International Realty in Peoria, said, ‘I expect a strong 2015 where buyers and sellers will get back to being on more equal footing.’ In Glendale, at the end of 2013, he said only a $6 per-square-foot difference existed between asking and sales prices. In the second quarter of 2014, Glendale seller confidence exceeded the market. Asking prices were at $143 per square foot; sales prices were only $103 –– a $40 per-square-foot difference. ‘Luckily for them, Glendale sellers are now looking more realistic, at $120 asked against $106 per square foot sold,’ he said.”

“The new-home market is also improving and should continue upward in 2015, barring the traumatic, said Jennifer Moore, an agent with West USA Realty in Peoria. ‘With 20 builders and more than 37 new subdivisions in progress, and more expected to open in 2015 just within the 85383 zip code in Peoria alone, the housing industry in 2015 for the West Valley should prove to be extremely successful,’ Moore said.”

The Miami Herald in Florida. “Sales of existing condos in Miami-Dade County plunged 15.5 percent in November from a year earlier to 1,077 units, according to the Miami Association of Realtors. Miami-Dade existing condo sales in November were down 28.6 percent from October, which tallied 1,508 closings, and single-family home sales were off 19.3 percent from the prior month, when 1,204 sales were completed, the Miami Realtors said. The inventory of existing condos soared to 11,515 units in November, up 16.9 percent from a year earlier. Existing condos listed for sale are facing rising competition from the various pre-construction projects around Miami.”

“The condo inventory amounted to 8.4 months of supply, the highest level since the housing recovery took hold. Buyers negotiated slightly more price discounts in November, according to the statistics. Single-family homes sold at an average of 93.5 percent of original list price, compared with 95.3 percent a year earlier. Condos fetched on average 91.9 percent of original list price, down from 94.4 percent in November 2013. ‘Considering the steady rise of closed sales in the past several months, statistics like this are bound to happen,’ said Marnie E. Allen, president of Greater Fort Lauderdale Realtors.”

The Colorado Springs Gazette. “The Colorado Springs area’s unemployment rate declined by nearly a third, from 7.8 percent in October 2013 to 5.4 percent in October of this year. But dig a little deeper, and a bleaker picture emerges. Nearly half of the drop in the jobless rate resulted from more than 3,500 area residents leaving the local labor force. Fred Crowley, a local economic consultant, concluded that more than 4,700 residents in their prime working years - ages 35 to 54 - had exited the local job market during the same period.”

“The reason, he believes: Wages in the Colorado Springs area have declined since 2000 as the local economy has traded high-paying jobs in manufacturing, information technology and construction for low-wage jobs in the hotel, restaurant and call center industries. The average pay of jobs that were lost is nearly three times higher than the jobs that replaced them, resulting in a decline in the area’s wages of more than $150 million between 2010 and 2013.”

“‘This is scary. We need to grow technology and manufacturing,’ Crowley said. ‘Most of the people who have dropped out of our labor force probably have left the area. The inference is that they lost good opportunity and there are no longer good opportunities here. Without high-wage jobs, average incomes will continue to decline, residential housing prices could soften and consumer purchasing may decline,’ Crowley warned. ‘Unless corrected, we face a dark economic future in El Paso County.’”

The Star Tribune in Minnesota. “Free residential lots in Claremont, Minnesota! Sound like a scam? Officials in this southeast town of 548 people think that may explain why the offer has no takers. Not now. Not for years. A developer bought the land for a subdivision but stopped after building one house when the housing market crashed in 2006. That left the town with $450,000 in bond payments and 14 empty lots. At first Claremont tried to sell the lots, worth $28,637 apiece. No one came calling, so the town made the lots free.”

“‘I think it was just one of those things that people thought was too good to be true.’ said City Clerk Liz Sorg. ‘We’re trying to advertise them a bit more and get the word out that it is a for-real deal,’ Sorg said. ‘It is a free lot we’re willing to give you.’”

“There’s also the added pressure of needing people to move into the lots to generate revenues for the bonds on the failed development. ‘We’ve tried about everything possible to try to get somebody to build on these lots,’ said Ginny Busch, Claremont’s former mayor. ‘We have to keep paying — the bonds don’t go away. The road is in. It’s all paved. There’s water. There’s sewer. There is electrical. There’s curbs.’ But, she lamented: ‘No houses.’”

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It’s Friday desk clearing time for this blogger. “A claim by Fitch Ratings Service that the Texas housing market is the most ‘overvalued in the country’ and homes are selling for prices which are ‘unsustainable’ is being openly mocked by housing industry experts in the state. ‘I think that’s pretty silly,’ Mark Dotzour, an economist who heads the Real Estate Center at Texas A&M University, told News Radio 1200 WOAI. Fitch also says the falling price of oil exposes the Texas housing market to a bubble. Dotzour says, please….’If our stays under fifty dollars for the next six years, yes, Texas could have a problem.’”

“A 4 bedroom, 2.5 bath, 2400 square foot home in a nice neighborhood in San Antonio for sale today for $180,000. An almost identical home in a similar neighborhood in Los Angeles is on the market for $715,000. ‘And they say it’s Texas that has a real estate bubble?’ one local real estate executive told News Radio 1200 WOAI.”

“Home sales plunged 23 percent across the San Fernando Valley in November from a year ago, and the persistent market slump will likely drag into next spring, said the San Fernando Valley Economic Research Center at California State University, Northridge. Sales declined 30 percent from 1,380 in October. November’s total was the lowest since 947 in February of 2009, the center said, making the month the 14th consecutive of year-over-year sales decline. ‘This year has been one of consistently slow home sales, and we are seeing a further expected slowdown as we move to the end of the year. We expect this slowdown to continue into at least March of 2015,’ said economist William W. Roberts, the center’s director.”

“Residential brokers who help Russians find homes in Miami say the plunging value of the ruble will probably affect their clients in a variety of ways. The exchange rate from rubles to dollars results in properties that are twice as expensive for Russian buyers and current condo owners, said Irina Kim Sang, broker/associate for Coldwell Banker Miami Beach. There will be a number of consequences, Ms. Sang said. ‘Those who have invested $1 million plus [for a condo] have at least $1,000 in monthly fees,’ she said. ‘With the ruble devalued, they’re paying double the amount for maintenance and, should they only be using the property for three to six months of the year, they may want to sell.’”

“House prices in London went into reverse in November, falling below the £500,000 mark on average, and have slumped in some of the wealthier south-west postcodes of the capital, in the latest evidence that 2014’s property boom is cooling rapidly. The collapse in both the oil price and the Russian rouble will hurt the prime central London market, according to forecasters Capital Economics. It said: ‘The collapse in the value of the currency means an average priced home in a prime London borough in roubles is now around twice as expensive as it was at the start of the year.’”

“Although the supply for Phnom Penh’s condominiums currently outstrips demand, their numbers are expected to more than triple from 3,090 today to around 10,000 by 2018, according to real estate firm Century 21’s Condominium Report 2014. Driving this growth are large projects such as the $700 million, 900-unit DI Rivera development on Diamond Island, scheduled for 2017, the report says. Prices grew 6 per cent year on year, with an average price per square metre at $1,900.”

“But despite this expansion, the majority of the capital’s completed condominiums are vacant, as most sales go to foreign speculators and Cambodians remain culturally reluctant to purchase the units. Developers’ claims of selling out 70 per cent of their projects may be too rosy as well. ‘Despite the high rate of reported sales by condominium developers, it is found that the some of the reported figures are bookings with small deposits rather actual sales transactions whose rate remains low,’ the report reads.”

“Secondary market prices of properties in posh South Delhi localities have fallen 25-30 per cent over the last one year as a pileup of inventory and need for money turn many investors into desperate sellers. Compared with peak prices, the discount is as much as 40 per cent, say brokers. Property brokers and consultants say there are several distress deals available in the market today. A south Delhi broker, who did not wish to be named says every builder today has unsold inventory. ‘Many of them are unable to hold on to this inventory anymore as they are strapped for cash.’”

“In a recent deal, an apartment built on a 1,200 square yard plot in Delhi’s posh West End area was sold for Rs 13 crore. The sellers were asking for Rs 17-18 crore a year back. During the peak, it would have sold for around Rs 22 crore. Similarly, a builder sold a floor in Niti Bagh for around Rs 13-14 crore, climbing down from his ask of Rs 18-19 crore about 10 months ago. A 1,200 sq yard plot in Hauz Khas that a family was asking Rs 60 crore for six months back isn’t getting sold for Rs 45 crore today.”

“Housing prices in the Kingdom will go down 30 percent due to falling oil prices distribution of more low-cost homes and the imposition of Zakat on vacant land a real estate expert has predicted. ‘The real estate market is facing an unprecedented recession and many agents have spoken about falling sales’ said Bandar Al-Aboud. He said commercial banks in the Kingdom have played a role in hiking prices by granting huge amounts to citizens in long-term housing loans. ‘This increased liquidity and led to skyrocketing prices.’”

“According to one blogger Khamis Al-Jaary prices of plots in north Jeddah rose from SR20000 to SR200000 per square meter. ‘After the real estate collapse it came down to SR30000. But now prices have gone up again to SR500000. It’s now time for them to fall again’ he said.”

“The current turmoil in global commodity markets, most notably with the collapse in oil prices, is a result of global supply outstripping demand – something we also see graphically in the number one market, China. China is suffering historically unprecedented levels of overcapacity for everything from steel to solar panels and nowhere is this more glaring than in the housing market. House sales nationally fell by 10 percent in 2014 and the country now has around seven years worth of unsold housing inventory, according to real estate expert Ai Jingwei. A Beijing business newspaper has published a ‘ghost town index’ stating there are at least 50 cities in which half or more of the housing is unoccupied.”

“The term ‘new normal’ to underline lower GDP growth has been adopted by the CCP regime and widely promoted in the state media. The regime is trying to pull the wool over people’s eyes by presenting the deepening slowdown as a deliberate and intended policy, as something positive. Deflation arises when financial bubbles burst as occurred in Japan when its property bubble collapsed in the early 1990s, and today in China as a result of overproduction and overconstruction. Worst of all, deflation exacerbates the debt burden for companies and governments by increasing the real cost of loans.”

“Whether China’s economy will suffer a hard landing in the next period (commonly defined as GDP growth below 5 percent) is an open question. Some economists warn that a ‘long landing’ is the most likely scenario, echoing our own predictions that China is now entering a ‘Japanese phase’ of deflation, debt crisis and stagnation, with major implications for the class struggle and political stability in the period ahead.”

“Thirty years ago, a steep slide in crude prices forced Larry Oldham to gut the payroll at his Midland oil company down to just himself and one other who worked as secretary, accountant and oil lease specialist. It seemed to Oldham that everybody owed somebody else a little money. The oil bust of the mid-1980s still swallowed up oil companies, banks, real estate markets, and thousands of jobs in Texas, sending the state’s roaring economy into a slump for years. ‘I wish I could paint a rosy picture, but I’m a realist. This is my fourth downturn,’ said Oldham. ‘Everything’s going to get pretty ugly.’”

“The state’s housing market also sees big dips in home permits when U.S. crude prices fall sharply, and the current oil crush may hit the market as hard as it did in 1986 and in 2009, according to Barclays.”

“In this latest boom, oil companies have found a new source of eager money lenders. The Federal Reserve has kept interest rates low since the financial crisis, prompting investors to seek better returns by pumping more than $200 billion into higher-paying - but risky - low-grade corporate bonds for energy companies. Prices for the U.S. energy sector’s high-yield debt instruments, known as junk bonds because they carry high risk for investors, have dropped nearly 20 percent since June. ‘The whole credit spectrum has been experiencing a significant amount of shock,’ said Shaia Hosseinzadeh, a principal at investment firm WL Ross & Co.”

“The credit strategy team at Deutsche Bank, headed by Jim Reid, pose an interesting question: ‘Are we any nearer to finding a more sustainable financial system? Or have we simply delayed the economic pain and are continuing on the completely wrong path policy wise?’ In a report entitled ‘Plate Spinning,’ they state: ‘The problem for central bankers is that they have inflated certain asset prices to levels where, if they reined in their actions too much, then they would likely see adverse market moves and a loss of confidence in the system.’”

“Central bank ‘easy money’ has inflated stock prices across the world but there has been an absence of any meaningful improvement in the underlying economy. The stark reality facing investors in 2015 is that the depression which was avoided in 2009 by ‘printing’ huge amounts of money is still unresolved and five years of inflated asset prices have left global markets incredibly unstable.”

“The unimaginative and badly handed policy response of money printing has wreaked havoc on asset allocation across the globe. Overinflated asset prices have magnetically attracted capital to all sorts of inappropriate places where it doesn’t belong, while the size of the Federal Reserve’s balance sheet has snowballed. We now have billions invested in oil rigs that could be left rusting in the middle of the ocean if prices remain at their current level. Even more capital is gathering dust in empty houses across China. In both cases, tumbling asset prices could results in trillions in loan losses for the banking sector. Technology companies have also attracted billions of investment yet create very few jobs, no profits and no tangible product.”

“The 2009 depression avoided by printing money remains unresolved. What we do know is that the US monetary base is now shrinking after the third round of QE was brought to the close in October. And the Fed is also expected to hike interest rates at some point next year. Investors might have to readjust to a world without grossly overvalued assets in 2015.”

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The Daily Mail reports on the UK. “House prices are falling all over Britain as the property market ends the year with a whimper. The value of the average home fell in nearly a third of UK postcodes in the three months to November, according to property website Hometrack. In London, the worst-affected markets include previously booming Wandsworth, Lambeth, Southwark and Lewisham – as well as Knightsbridge, home to the rich and famous. The softening of the market follows a clampdown on risky mortgage lending by the Bank of England, and worries that some areas have become overpriced.”

“‘Everything is coming off the boil very quickly,’ said Hometrack’s Richard Donnell. ‘We have had a huge surge of pent-up demand coming into the market from January 2013 onwards, but we are now running out of people who want to move or can afford to move.’”

The Poker News Report. “Macau casinos have seen their collective market value decrease to the tune of $75 billion. Casinos in Macau are heavily reliant on high rollers. Macau is a Chinese territory and the only region in China where casino gambling is allowed. The country’s president, Xi Jinping, is on a mission to wipe out corruption and believes that a number of high rollers may be laundering money through Macau casinos. It is believed that a crackdown will soon be waged by the Chinese government on efforts to move money through Macau — money that was perhaps obtained via ill-gotten means.”

Want China Times. “Gu Liping, the wife of newly disgraced Chinese official Ling Jihua, has an insatiable appetite for money and sex that puts her husband’s alleged corruption to shame, reports our Chinese-language sister paper China Times. Ling, 58, became the latest casualty in President Xi Jinping’s sweeping anti-graft campaign. In 2003, Gu established Youth Business China (YBC), a non-profit program aimed at promoting youth entrepreneurship.”

“YBC is alleged however to be merely a front for Gu to make lucrative land and property investments and is used to conceal exchanges of money for power, with claims that the charity owns property worth at least 3 billion yuan (US$480 million) in the Shanghai area alone. Certain media reports allege that Gu owns two luxury properties in Japan with a combined market value as high as US$500 million, and that her family controls bank accounts in Japan and Singapore which together hold around 37 billion yuan (US$5.9 billion).”

From Asia One. “For €6.95 million (S$11.24 million), you can be the owner of a French Villa with views of the Mediterranean. According to South China Morning Post, the luxurious Cannes home was owned by former Politburo member, Bo Xilai, who has been jailed for bribery, corruption and abuse of power. ‘China had vowed to confiscate the mansion but it was unclear who put it up for sale or whether the government had made any progress in its effort to seize the property,’ Reuters reported.”

Mine Web on Australia. “Australia cut its iron ore price estimate for next year by 33% as surging output in the world’s top exporter outpaces Chinese demand growth, adding to a surplus. China, which buys 67% of global seaborne supply, is set to record its weakest annual growth since 1990. ‘The current market oversupply is expected to prevail through the start of 2015 in response to a likely ongoing cyclical downturn in China’s housing sector,’ the report said.”

The Courier Mail in Australia. “Gold Coast businessman Peter Drake has lost control of all of his assets to a bankruptcy trustee and been forced to hand his passport to a Brisbane court. The LM Managed Performance Fund collapsed in March last year when the directors appointed corporate paramedics. LM attracted investors and sank their money into the development of a $1 billion Gold Coast housing estate with features designed by gardening guru Jamie Durie and surfing champion Kelly Slater. At its peak, LM boasted it managed $3 billion in its nine funds.”

The New Zealand Herald. “A woman who bought an Auckland apartment to get on the property ladder has been left ‘financially strained’ and says the property is now worth about half what she paid for it. Joo Yom bought her three-bedroom apartment for $436,500 in 2007. Although city-wide capital values have risen on average 34 per cent since 2011, with some shooting up more than 50 per cent, the value of Ms Yom’s property has dropped to $425,000 - $11,500 below what she paid.”

“Ms Yom wants to sell her fifth-floor apartment, but has been told by real estate agents this was ‘not a good time.’ Some had told her the apartment could fetch ‘about half’ what she paid seven years ago - about $100,000 less than the $344,000 she borrowed to buy the property. Ms Yom said her foray into buying an apartment had left her suffering from stress, anxiety and insomnia. ‘I have had no overseas holidays since 2007 and have been forced to watch every cent because of all the outgoing costs I have to pay.’”

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