February 17, 2015

Real Discounts A Response To Real Supply Glut

Bloomberg reports on China. “Thousands of families who bought homes in Kaisa’s unfinished projects in Shenzhen fear they’ll become collateral damage in President Xi Jinping’s anti-graft drive, which risks spreading to embroil other developers. The city suspended official registration of presale contracts at four of Kaisa’s unfinished developments, leaving legality of the purchase agreements in doubt, although construction work continues. Zhang Yinghua and her husband sold their home in central China in July so that their son, who was becoming a father, could buy a place in the southern metropolis of Shenzhen, across the border from Hong Kong.”

“Months later, the 65-year-old new grandmother found herself and her 1-month-old grandson joining more than 1,000 property owners chanting ‘I want my home’ in a peaceful sit-in. ‘Now I don’t even have a home to return to,’ Zhang, who lives with her husband, son and daughter-in-law, paying 4,000 yuan ($640) a month for a rental apartment in Shenzhen, said in an interview.”

AAP on New Zealand. “New Zealand’s largest real estate group had 2010 properties on hand in Christchurch in January 2015, up 25 per cent on the same month last year. The average sale price of $NZ402,745 ($A386,715) in the month was down 13 per cent on the same month last year. This is the lowest monthly price Harcourts has reported for Christchurch since January 2013 when the average house price was $NZ384,648. ‘The increasing supply of property-on-hand is an indication that stock is not moving as quickly as it has been,’ Harcourts’ chief executive Hayden Duncan says.”

The Property Observer on Australia. “Port Hedland’s dramatic property price struggles were brought into sharp focus over the weekend at the auction of a home at 18 Edgar Street in Port Hedland. ABC reported that the fibro cottage passed in at auction at $360,000, with the highest offer reflecting 2006 price levels. The house had traded just four years ago for $1.3 million. In 2009 it sold for $870,000 and at $350,000 in 2006.”

“The home’s sales agent, Barry Walsh at Jan Ford Real Estate, tells Property Observer that at the peak of the mining boom, property prices in the Port Hedland and South Hedland regions were unsustainable. ‘It was totally unsustainable where it was, and now that it’s stabilising, it will bottom out, and is in the throes of doing that,’ says Walsh. He says ‘18 Edgar Street was advertised to rent at $2,400 per week at the market’s peak,’ said Walsh. ‘And now, you wouldn’t rent it for $500 per week. That’s a reflection of the rental market.’”

The Economic Times on India. “Good news for prospective home buyers in India’s big cities - finally, some real discounts from real estate majors. Take a look at these builders’ offers in Mumbai, NCR, Bangalore and Kolkata: flash sales offering nearly 25% discount on per square feet rates, free studio apartments for those who buy top floors of a luxury residential block, free modular kitchens, air conditioners and even wardrobes.

“Home sales data is that rare economic indicator that’s refusing to improve - 832.09 million sq ft of unsold inventory as on end-December and 8% fall in sales for the quarter ending December, according to figures from property research firm Liases Foras. Real discounts are a response to this real supply glut. And builders are not the only concerned lot. Investors who had bet on handsome resale margins are stuck with unsold apartments. Some of them are willing to sell apartments at below current market prices.”

“‘Developers are stressed in terms of sales. They need to show bookings to even raise construction finance,’ said Ashwin Chawwla, CEO of BigDeals. Yashwant Dalal, president of Estate Agents Association of India, says developers are offering brokers bigger incentives but the problem is the lack of buyers. ‘In this kind of market, builders have no option but to lure buyers with incentives and offers,’ Dalal says.”

“Singapore home sales posted the weakest start to a year since the 2008-2009 global financial crisis government lending curbs stemmed purchases. Developers sold just 372 units last month, the lowest January sales since 2009, when they offloaded 108 homes, according to data by the Urban Redevelopment Authority. In December, 230 units were sold, the data showed.”

“Singapore’s annual home sales dropped to a six-year low in 2014 as property policies hurt buying sentiment. Sales fell by half to 7,316 units from 2013, the lowest number since 2008, according to data from the authority. ‘Singapore is facing headwinds,’ Kwek Leng Beng, the billionaire chairman of City Developments Ltd., Singapore’s second-biggest developer, said at a briefing today.”

The Philippine Daily Inquirer. “Metro Manila’s residential property market contracted in 2014 in terms of both additional inventory and sales take-up. But the current levels were, according to property consulting firm Colliers Philippines, ‘more rational’ compared to the exuberance seen in the previous three years. In a briefing on Thursday, Colliers Philippines director for research and advisory Julius Guevara said that nearly 40,000 residential units were sold last year, 7 percent lower than the take-up in 2013.”

“He said the residential property market was only continuing the ‘correction’ that started in 2013 after hitting a high of 51,000 residential units taken up in 2012. Asked to define what Colliers considered a ‘rational’ residential market, Guevara said this was a market driven by real underlying homeowner demand and not investors who intend to rent out these units.”

Bits Bucket for February 17, 2015

Post off-topic ideas, links, and Craigslist finds here.