April 21, 2015

Selling For Profit, Selling Out Of Necessity

New Kerala reports on India. “Affordable, need-based housing is fast shrinking in Goa even as the state is being positioned as a luxury destination for the rich and an ‘ideal’ market for investment-oriented second homes. Over the last few years, a steady stream of luxury housing projects, niche gated residencies and mega housing complexes have emerged across the Goan countryside, even as most of the units in their upmarket tenements are vacant most of the year. A 2011 official census revealed that a quarter of the 500,000-odd registered homes in Goa are vacant and this trend is disturbing as far as creating the space for need-based housing is concerned, said former chairman of Indian Institute of Architects (Goa) Tulio de Souza.”

“‘A lot of housing stock that is being created in Goa is either as second homes to citizens and people from all over the country and the other is the speculative housing,’ said de Souza.”

Al-Monitor on Iran. “Due to a growing demand and a tendency to prefer investments in tangible assets, property prices offered a guaranteed profit in Iran until 2012 with very few exceptions of short-term stagnation. Nonetheless, since the summer of 2013, an unprecedented real decline in housing prices has been experienced. According to the Statistical Center of Iran, housing prices have dropped by 14.3% in the 12 months prior to March 20. While the younger generation of Iran’s urban population is looking for smaller housing units, institutional investors have been producing larger apartments that only attract a limited number of customers. In fact, there are 1.6 million empty housing units in Tehran waiting to be sold or rented.”

The Malay Mail. “Foreign investment in Iskandar’s anticipated economic boom and population growth has been punctured by a very different reality. ‘There is a misconception of the demand market here… there is a clear mismatch between supply and demand,’ Johor Baru MP Tan Sri Shahrir Abdul Samad told Malay Mail Online. ‘While there is an oversupply of premium properties, the demand however is for medium and low cost ones owing to peoples incomes. Foreign developers think there is a demand for their properties and that is not happening. This is what’s happening and they have to live with it. If they are willing to take the risk then we can’t stop them.’”

Bloomberg on Australia. “Australia is experiencing a two-speed housing market: while prices in Sydney have surged to records, the end of the mining boom is depressing home values in commodity-rich regions where prices once rivaled those in New York and London. Houses in Blackwater sold for a median price of A$450,000 in 2012. That hit A$193,000 last year, a 57 percent drop, the data show. About 200 houses in the town were listed for sale over the last 12 months, and just 12 sold, according to an April 16 report from Propell National Valuers, a real estate consultant.”

“‘We had a massive boom in 2011 and 2012, with investors from all over Australia going to seminars and shown fairly rosy projections for prices,’ said Clinton Adams, founder of C.D. Adams Real Estate. ‘For a period of time that all came true, but when the prices fall and they’re needing to put money in, they say ‘Let’s just take a hit and get rid of it.’”

Reuters on China. “China’s drumroll of policy support for its flagging housing market has met an unlikely foe: banks. Beijing has tried to revive a flagging housing market as it looks to arrest an economic slowdown, but banks are increasingly worried about bad debts and are not passing on policy steps like interest rate cuts and lower downpayment requirements to home buyers. ‘It’s difficult because our margins are already squeezed, there isn’t much differentiation in the market, so our focus is on how much our capital costs are,’ said a banker at a top-10 Chinese lender, explaining why his bank is reluctant to lend.”

“One problem has been over-supply. At end-March, China had 649.98 million square meters of real estate to sell, an increase of 10.76 million square meters from February, and housing investment fell to its lowest since 2009. Average new home prices in China’s 70 major cities dropped 6.1 percent last month from a year ago, the seventh consecutive monthly fall.”

The Regina Leader Post in Canada. “The average price for a detached bungalow fell more than five per cent in the last 12 months in Regina, according to Royal LePage. The average price for single-family homes in Regina deteriorated in the first quarter, with detached bungalows dropping 5.4 per cent year-over-year to $306,500 and standard two-storey homes declining 1.8 per cent to $349,500. ‘Last year ended with an abundance of supply in the market, and the first quarter of 2015 has finished the same way,’ said Mike Duggleby, managing partner with Royal LePage Regina Realty, who attributed the softening in prices to the 20-year high in listings.”

KTAR in Arizona. “It’s a perfect storm, eh? Combine low oil prices, the falling Canadian dollar and the rise of Valley real estate prices and you get a lot of our neighbors from the North putting for sale signs in their Arizona yards. Terri Bozok from Edmonton, Alberta owns a second home in Mesa. She has no plans to sell but it’s a different story for many of her Canadian friends who own property here.”

“‘They bought when prices were low and when the Canadian dollar was at par,’ she said. ‘They’ve made their profit and will make even more money when they convert the U.S dollars into Canadian.’”

“One of those friends bought several rental homes during the housing crash and is now getting them ready for sale. While some are selling for profit, others are selling out of necessity. ‘For retired snowbirds, a weaker Canadian dollar makes it much more expensive to spend the winter here,’ Bozok said. ‘Many are on fixed incomes.’”

Bits Bucket for April 21, 2015

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