August 31, 2015

Investors Are The First To Exit

The Calgary Herald reports from Canada. “According to the Calgary Real Estate Board, MLS sales in the Calgary apartment category this month, to Thursday, have fallen 38.1 per cent compared to the same period a year ago, with 245 transactions. The average sale price has dipped nearly 11 per cent, to $296,304. ‘If you own property in Calgary and are worried about your home’s value, it’s probably just best to wait this energy recession out and apply prudent debt management practices to your personal finances – reduce or consolidate high interest debt, make your payments on time and in full, and try to build up some emergency savings in the event that unemployment comes knocking.’ Lesley-Anne Scorgie, founder of MeVest and a bestselling author on personal finances.”

“Corinne Lyall, CREB’s president, said typically the condo market is going to be affected quicker than the detached market. ‘I think it’s because there’s more inventory available in the condo market,’ she said. ‘And there’s more choice for buyers looking in that housing segment and plus there’s not only resale inventory but as well new product available and being built currently.’”

The Cape Breton Post in Canada. “Janey Forrest has been trying to sell her three-bedroom Westmount home overlooking Sydney harbour for the past 18 months. Forres moved to Cape Breton from Mission, B.C., in December 2007, after visiting a friend in the area. She said she fell in love with the island and its low housing prices compared to the B.C. lower mainland. ‘I didn’t come here to buy a house. I just came here to visit for five days, and on the fifth day I bought this house,’ Forrest said. ‘I looked around (Sydney) and I saw what the costs were, and at that time in 2007 there was not one house for sale here. Every house I looked at had several offers on it, so I ended up buying this one.’”

“Sydney realtor Mary Ann MacCormick said it has become a classic buyers’ market, and that means sellers must remain patient as people looking to buy weigh their options. ‘For example, I may show (a client) 15 houses instead of five because there’s so much variety out there that they can choose from,’ said MacCormick. ‘And people with houses for sale have to be patient and do everything they can to make their houses appealing.’”

The Strait Times in Singapore. “Prices of completed private apartments were unchanged in June and last month although this could represent a temporary lull before they drop further. These properties are still about 3 per cent lower than a year ago and 9.8 per cent below their peak in July 2013, according to flash estimates for the NUS Singapore Residential Price Index (SRPI). Prices of small units are down 2.9 per cent year on year and have fallen about 9.5 per cent from an August 2013 peak. ‘Shoebox apartment rents and prices will be on the general downward trend, as the number of such completed properties grows, especially in suburban areas,’ said R’ST Research director Ong Kah Seng.”

From DNA India. “Here’s the big proof that real-estate prices in Mumbai are falling. A 13,000 sq ft sea-facing duplex apartment in Palm Beach Road in Navi Mumbai has been sold for Rs 12,500 per sq ft against the Rs 20,000-Rs 25,000 per sq ft quoted a few months earlier. ‘At Palm Beach, most apartments fall in the luxury segment. If rates are plummeting in this segment, it means property rates are likely to slide further. Because high-segment houses always face the first hit,’ said Pankaj Kapoor, MD, Liasea and Foras, a property research firm.”

“Kapoor said that the holding capacity of developers cannot stretch beyond a certain period. They have to pay high interests to banks, he said. ‘Investors are the first set of people to exit during a downfall. Currently, most investors are exiting because there is no significant growth or appreciation in the property market.’”

The Wall Street Journal on Brazil. “Not long ago, Brazil stood as the leading example of how a developing nation could rise toward global prominence on the force of a China-driven commodity boom. Now Brazil is looking like a symbol of something else: resource-rich nations’ habit of ending their booms with spectacular busts. ‘We went from Brazil mania to Brazil nausea,’ said Marcos Troyjo, a former Brazilian diplomat who leads a Columbia University center studying emerging markets. ‘We are looking at a lost decade, where growth stagnates, inflation is high, and, most sadly, a decade where you’ve learned nothing.’”

“China has caused turmoil in many places, but none more so than in this prime supplier of commodities to a country whose once-voracious appetite for them has dimmed. At the height of Brazil’s boom, movies and taxis in downtown São Paulo were more expensive in dollar terms than in New York. Many of Brazil’s problems were homegrown, though, said Alexandre Schwartsman, a former Brazilian central-bank official: ‘We managed to produce this recession ourselves.’”

The New Zealand Herald. “China, until this year, had been by far New Zealand’s biggest export destination, but a staggering 77 per cent decline in the value of whole milk powder exports put Australia back in the top slot in the year to March. JBWere investment strategist Bernard Doyle said the effect of Chinese capital flows could prove pivotal for property prices here and in Australia, where Chinese investment has played a part in the strength of both markets. ‘There is no doubt in my mind that if Chinese capital flows were to get crunched, it would have implications for our housing market,’ he said.”

The New York Times on China. ” In recent days, an advice column has circulated widely on China’s most popular social media phone app. It is aimed at young Chinese urban professionals. Its nuggets of wisdom include: ‘Work hard at your job so you are the last to be laid off’ and ‘In an economic crisis, liquidity is the number one priority.’ Many young middle-class Chinese who grew up during the nation’s glittering boom years, when double-digit growth was the norm, are suddenly confronting the shadow of an economic slowdown and even hints of austerity.”

“They are talking of canceling vacations and delaying weddings and even selling recently purchased apartments to have cash on hand. Those who have lost money in the ongoing stock market crash are especially anxious. One Chinese woman who posted Lin’s column on her WeChat account said it ‘echoed the zeitgeist.’ She had tried to sell an apartment but said, ‘Now I think I might hold off until the market recovers a bit.’”

“Gao Yike, 25, who works at a real estate company in the northeastern provincial capital of Harbin, said in a telephone interview that the project management department laid off employees in April. He said a growing number of midlevel and senior executives were leaving the real estate industry for technology companies and housing sales at his company were notably worse than last year. Gao had also lost half of his initial investments in the stock market. ‘The golden age of the real estate market has come to an end,’ he said.”

Bits Bucket for August 31, 2015

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