July 14, 2015

The Dream Of Huge Investment Opportunities

The Star Phoenix reports from Canada. “An oversupply of housing is having a ’severe impact’ on Saskatoon developers big and small, says Ruben Beattie, business manager with Equinox Home Innovations. ‘If you look at the number of sales, they’re not that far off, but you look at supply, it’s ridiculous,’ Beattie said. Developers such as Equinox now aren’t building as many units because they’re already sitting on unused inventory, Beattie said. In that environment, buyers ‘have all the leverage in the world,’ he said.”

“Most of the unused housing is in newer subdivisions, such as Rosewood and Evergreen, with Kensington looking like a ‘ghost town,’ he said. ‘Property is just not moving there.’”

The National on Dubai. “Real estate prices fell in Dubai along with growth rates in business activity and new orders during the second quarter. About half of the 70 property agents in Dubai polled by Emirates NBD and Markit reported a drop in average sale prices during the second quarter. This coincided with fewer new buyer inquiries. It was attributed to the Ramadan period as well as reduced appetite for risk among investors, especially from international buyers.”

“‘There is uncertainty around Greek and Russian economies, and with the volatility in the currency market it is far more expensive to buy properties in Dubai for Indian and European expats than, say, a year or two ago,’ said Matthew Green, the head of research and consultancy at CBRE in Dubai. ‘Moreover, a significant number of units are still being delivered to the market and more are expected to come into the market during the second half, putting pressure on sale prices.’”

AzerNews from Azerbaijan. “Experts in Azerbaijan’s real estate market have good news for those who wish to purchase a house. Real estate expert Rashad Aliyev told local media that prices in the secondary housing market in dollar terms have decreased by more than 30 percent. ‘Real estate prices in Azerbaijan have reduced since the end of last summer. This trend will continue as long as the movement of capital in the real estate market will not recover,’ he said.”

“Nusrat Ibrahimov, the CEO of MBA Consulting Group, believes that the decline in apartment prices is due to the drop of demand for them. Restrictions imposed on mortgage credit played a decisive role in this, according to experts. ‘Cheap apartments were mainly purchased on the expense of mortgage credits. In recent months, banks have introduced restrictions on mortgage credits. As a result, this has led to a drop of demand in the real estate market and as a consequence, a decrease in apartment prices,’ he noted.”

The New Zealand Herald. “It seems everyone in Auckland has a story to tell about Chinese buyers wanting their house. The trend has even alarmed some real estate agents - Barfoot and Thompson’s Ian Thornhill raised concerns in 2013 when a Chinese investor with ’surplus funds’ bought an Epsom house, reportedly for more than $2 million, and then left it empty. ‘I don’t think it’s a good thing at all,’ he told the Herald. ‘Kiwis are getting really upset. They can’t compete with Asians who have the money and they pay more … It’s as plain as the nose on your face, what’s happening in the auction rooms each week.’”

The Australian. “The housing boom that has hit Australia’s two biggest cities has brought more foreign-based buyers who leave the homes vacant and derelict after spending ­millions of dollars buying them, potentially turning some suburban streets into eyesores. ‘Most of the overseas investors, particularly on the new homes, are buying because they want to invest their money in Australia. That doesn’t mean that they are going to move out of their house if they are Hong Kong-based,’ said Century 21 Australia chairman Charles Tarbey. ‘A lot of them don’t rent out the apartments — they just buy for capital gain.’”

“Buyers’ agent David Morrell ­alleges that many vacant homes have been bought illegally by non-residents. ‘When you see a 24-year-old girl buying a $4m house you go, please, something’s not right,’ Mr Morrell said.”

The Herald Sun in Australia. “A major bank is demanding homebuyers looking in the Pilbara stump up a 30 per cent deposit before giving them a loan. ANZ’s new rule means the average homebuyer in Port Hedland would need a deposit of about $265,000. But local real estate figures said the decision was not surprising, given plunging prices. ‘The market has completely tanked, buyers are lucky banks are willing to give them 70 per cent loans,’ Pilbara Heart Real Estate agent John Briggs said. ‘It doesn’t matter that the banks want 30 per cent, because there are no people making offers anyway, it’s blood on the streets.’”

“In the 40 years Peter Lynch has lived in Karratha he’s seen booms and busts come and go – but he says nothing compares to the uncertainty of 2015. In the past 18 months Mr Lynch and three of his children have lost their jobs. Now in mortgage distress, if he sells his home – which in 2007 was valued at $880,000 – he’s unsure if he’ll recoup the remaining $200,000 on his mortgage. ‘These are sad times and difficult times for a lot us. The bank has given us a temporary lapse on our repayments, but we’re unsure what the future holds,’ Mr Lynch, who was laid off from a security job with Rio Tinto three months ago, said.”

“Mr Lynch said ANZ’s new policy to increase deposits to 30 per cent would have been helpful during the boom, but will now just make affordability even harder for locals.”

Reuters on China. “About a week after Shanghai’s main stock index broke above 4,000 points in April, the leading newspaper of China’s ruling Communist Party weighed in with patriotic glee. In the longer term, the ‘Chinese Dream’ of rising prosperity and security championed by President Xi Jinping would be reflected in capital markets, creating ‘huge’ investment opportunities. The stock market turmoil in the last month has shattered that particular dream for many small-time players.”

“Zhang Yingyi, a 30-year-old administrative assistant and mother of a three-year-old daughter, works full time at an international exchange programme in Shanghai. She and her husband earn reasonable salaries that put them in China’s emerging middle class. They live in a 2.5 million yuan ($400,000) apartment and recently bought a Mercedes-Benz B180 to shorten his commute. But the couple’s spending power is hobbled by debt for the flat and car, and Shanghai’s high living costs eat away at their monthly income. Zhang says her husband does not drink or smoke and they hardly buy any clothes.”

“Like many Chinese whose investment opportunities have been limited, what equity they do have is tied up in their apartment. ‘I don’t feel like I spend that much but there’s never money left,’ she said.”

“Zhou Sujuan, a 44-year-old manager at a private medical device company in Wenzhou, a coastal city 450 km (280 miles) south of Shanghai, lost 2 million yuan ($322,186) in the selloff. ‘This has caused me a lot of heartache. It will take some time to recover,’ she said. Zhou had hoped to buy a house in a different district to get her daughter into a better school. That dream will have to wait. Zhou concedes she was greedy, but also blames state-run entities for heavy-handed tactics in the market. ‘The government is unreasonable,’ she said. ‘It is forever a planned market, a planned economy.’”

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