The Real Estate Community Has Lost Its Exuberance
Reuters reports on Canada. “Sales of existing homes in Canada slipped further in January as the drop in oil prices hurt homebuyer demand in western Canada, the Canadian Real Estate Association (CREA) said. A sharp, sustained drop in oil prices has sideswiped the economy in the resource-rich provinces of Alberta and Saskatchewan, where homeowners are trying to sell houses before values decline further. ‘What is interesting to note about the housing measures is that there is a clear sense of panic,’ Mazen Issa, senior Canada macro strategist at TD Securities, said in a research note.”
“One realtor in Calgary said overall sales there are down 40 percent compared to last year and sellers are bracing for a price correction, but not a crash, as oil prices slump and fewer people arrive there looking for work. ‘That’s certainly going to take a lot of capital out of the province and the city and we anticipate housing prices will likely soften over the next couple of years, but talk of a mass slide of 20 or 30 percent is wrong,’ said Jim Sparrow, a realtor with Royal LePage. ‘Nobody is giving their house away and sellers are reluctant to start slashing the price of their homes,’ he added.”
The Houston Chronicle in Texas. “The city’s real estate community, after a years-long rally from the depths of recession, has lost much of its exuberance as oil prices tumble and energy companies issue pink slips by the thousands. The financiers who funded all those cranes and concrete trucks from downtown to the farthest suburbs are red-lining new projects. A high-end real estate broker predicted builders could soon be offering incentives - ‘closing costs, appliances, upgrades’ - in a market that only recently had homebuyers writing plaintive letters to sellers and paying well over asking price to get their second- or third-choice house.”
“Tens of thousands of rental units are expected to open this year and the giveaways have started, mostly in the brand-new developments. There is ‘abundant free rent’ in the Energy Corridor, particularly in new properties, Stacy Hunt of Greystar, an apartment development and management firm, said in an email. Falling oil prices have also shifted the calculus of homebuying. ‘The psychology of the people in Houston was this was a boom town,’ said Jacob Sudhoff, who arrived in 2010 from Corpus Christi to start a high-end real estate brokerage firm, Sudhoff Cos. ‘People were making more money off their homes than they ever made. Appreciation was happening at a record pace.’”
Emirates 24/7 on Dubai. “Property prices in Dubai’s secondary market are expected to soften this year though the market correction isn’t likely to be as drastic as 2009, according to Standard and Poor’s Ratings Services. Though prices and rents stabilised last year, transaction volumes have lowered since the first quarter 2014. Irrespective of that a number of new projects have been announced over the past 18 months. ‘Prices have come down by approximately 15 to 25 per cent depending on the areas from the peak hit in Q2/Q3 2014. This is a healthy correction as prices had appreciated 50-60 per cent in 18 months since the recovery which started after Arab Spring,’ Kalpesh Sampath, Director, SPF Realty, told this website.”
The New York Times on Singapore. “Lamborghinis, Porsches and Bentleys fill the driveways of multimillion-dollar villas in Sentosa Cove. Yachts line the 400-berth marina nearby. But signs of a slowdown are just beneath the shiny surface. The grass on front lawns has turned brown from neglect. Two condominiums last summer went for less than half their original price, while others sit empty.”
“At the W Residences, one of the newest condominiums, fewer than half of the units have been sold. Sheena Teng, a sale consultant for City Developments Limited, the developer of the W Residences, says that prospective buyers in Sentosa once were rich Asians looking for vacation homes. She said most of the current occupants at the W Residences were expatriate professionals in Singapore — and they are renting.”
“Borrowers are running into trouble as well. In a recent case, United Overseas Bank accused an Indonesian developer, the Lippo Group, of conspiring with buyers at a property in Sentosa Cove to inflate the value of their home loans. In the lawsuit, the bank says 37 of the 38 borrowers have defaulted on mortgages worth 181 million Singapore dollars. The suit claims that the developer handed out furniture vouchers, which amounted to a rebate of as much as 20 percent of the sales price; the buyers did not disclose the discounts. The Lippo Group has denied the accusations.”
“The few recent sales paint a grim picture. Most sellers have taken sizable losses. At one apartment building called the Turquoise, a unit sold last July for 4 million Singapore dollars. The seller bought the apartment in November 2007 for 7 million Singapore dollars, according to government data.”
The Bangkok Post in Thailand. “The condominium market in destinations favoured by SET-listed developers over the last couple of years is feeling the pinch from oversupply and weak demand. The situation is especially bad in major provinces such as Chiang Mai, Udon Thani, Khon Kaen, Chon Buri and Phuket. ‘The condo market in these provinces shares the same story. It boomed in 2012-13 with many condo units launched after the floods hit Bangkok in 2011, but demand is limited,’ says Samma Kitsin, director-general of the Real Estate Information Center (REIC).”
“Some projects completed last year had unit transfers of only 30% despite a sales rate of 80%. This happened for various reasons, including buyers failing to get home loan approval, while some were speculators who failed to find buyers to resell the unit to.”
“Phanom Kanchanathiemthao, managing director of property consultant Knight Frank Chartered (Thailand) Co, says now is a golden time for property-savvy investors to buy a condo unit at newly completed projects in Pattaya, particularly from Russian buyers. ‘Russian buyers’ purchasing power has dropped significantly due to the fall in the rouble. They may refuse to get a unit transfer,’ he says.”
