February 23, 2016

It Was Too High, It Was Crazy

The Herald Sun reports from Australia. “Unit prices in Richmond have plummeted more than $80,000 in 12 months according to latest data, while house prices continue to skyrocket. Jellis Craig partner Elliot Gill said the price slump was the result of oversupply, with units needing a ‘point of difference’ to stop them languishing on the market. He said many modern complexes were built with more than 80 per cent of apartments identical to one another. ‘If you want to sell, there can be three or four identical properties on the market,’ he said. ‘For houses, there are many buyers for every property, and for apartments there are many properties for every buyer.’”

Bloomberg on Hong Kong. “Hong Kong’s developers are offering enticements from iPhones to wine coupons to counter the slowest home sales in at least 25 years, to no avail. Their options are now narrowing down to the one they’ve desperately sought to avoid: price cuts. The next step may be the outright price cuts that developers have long resisted because of fears that they’ll fuel expectations of steeper declines.”

“‘Obviously buyers, whether as end users or investors, are taking their time and aware that prices might go down further,’ Antonio Wu, deputy managing director at Colliers International Hong Kong, said in a phone interview. ‘There will be a lot more discounts than today. If they really want to sell, they really have to cut the price and start sales.’”

Korea Joongang Daily. “The values of about 4 percent, or 270,000, of apartments sold in the first month of the year have dropped, according to a study by the real estate information provider Budongsan 114. ‘As the government tightened the regulations on loans, housing demands have shrunk and recently the oversupply of apartments and shrinking transactions have resulted in lowering apartment values,’ said Kim Eun-jin, head of the Budongsan 114 research team. ‘The price adjustment in Daegu and North Gyeongsang was inevitable as these regions have enjoyed a continuous rise of apartment values over the years.’”

Bloomberg on Brazil. “Some of the luxury apartments built in anticipation of the 2016 summer Olympic Games are at risk of being left unsold as the housing market deteriorates in Rio de Janeiro, Mayor Eduardo Paes said in an interview. ‘The real-estate market has really cooled down,’ Paes said from his office in City Hall. ‘Ilha Pura is the bigger risk. The guys did 31 buildings all at once, and they’re going to have difficulty.’”

“In the nine years since Brazil bid for the games, the nation and the city of Rio have gone from economic boom to bust, reversing the seemingly unstoppable rise of the real-estate market. Prices in Rio are poised to fall a ‘a little bit further,’ Paes said. ‘It was too high, it was crazy.’”

The National on Dubai. “Dubai property developers are offering increasingly generous terms to clinch sales in a softening market. ‘These offers are indeed a sign that the market is getting more competitive, but we believe that it doesn’t have any particular effect on the stock,’ said Sanyalak Manibhandu, head of research at NBAD Securities. ‘These sort of deals are the sort that only the big developers are able to afford to do. Effectively, what they are doing is pricing smaller Dubai developers out of the market. We don’t expect them to offer these sort of deals on all projects, and if they find that they aren’t working then they will probably not continue with them.’”

The Copenhagen Post in Denmark. “For the first time since 2001, Copenhagen is actually losing people, according to figures from the national statistics keeper Danmarks Statistik. ‘A deciding factor behind these figures are that families with small children – who want to leave the city but are hesitant to sell their apartment and purchase a house during a recession – are now beginning to move out,’ Hans Skifter Andersen, a professor of housing and welfare at Aalborg University, told Politiken newspaper.”

The Deccan Chronicle in the UK. “A spectre is haunting London, or at least central and property-valuable parts of the city today. Central London today, its housing stock, the flats in the new luxury tower blocks, the Victorian terraces of the whole of central London are being or have been, bought up with crooked, or what is known in India as ‘black,’ money by Russians, Arabs, Indians, Pakistanis and some Chinese and Africans.”

“Here’s a fairly typical story: An Egyptian individual called Ahmed Ezz, a steel magnate of sorts was arrested soon after the ‘Arab Spring’ in that country, fined £2 billion for stealing from the state and sent to jail. Nevertheless investigative journalists from Private Eye, a Brit fortnightly, now allege that Mr Ezz’s laundered money was used through two companies registered in the non-tax-paying black money-laundering British Virgin Islands to buy one of his three wives a flat in Knightsbridge worth ‘tens of millions of pounds’ and another in an Edwardian apartment block worth £3.5 million.”

“If New York is known as the Big Apple, London should be rechristened the Big Launderette. This great laundromat has had a disastrous effect on the social fabric of Britain. House and flat prices in the whole of London have rocketed and young working people can’t afford to buy into the London housing market even at the humblest one-room or studio-flat level many tube stations away from Oxford Circus. And Central London has nothing resembling a ‘community.’ I still know people who are proud of living in Chelsea or Knights-bridge and in my crueller moments remind them that they are living in ghost towns.”

Bits Bucket for February 23, 2016

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