April 6, 2016

The Heady Days Of Old Are A Distant Memory

The Financial Post reports from Canada. “Even realtors in Calgary are suggesting picking the bottom of the housing market is getting tougher and tougher in the oilpatch. The Calgary Real Estate Board said that its benchmark house prices were 3.51 per cent lower from a year ago. High-rise apartment have been the hardest hit sector of Calgary’s housing market and suffered a first quarter decline of 17 per cent in sales from a year ago. The benchmark price of $281,300 in March for an apartment was seven per cent below where it was a year ago. At the same time, homeowners are continuing to try and exit the market. ‘Homebuyers continue to wait and see if there are going to be further declines in home prices before making an offer,’ said Cliff Stevenson, president of the board.”

The Rio Times on Brazil. “The price of real estate in Brazil rose on average only 0.53 percent over the twelve months to March, according to the FipeZap index. It is the smallest increase registered since the index began in 2008. The high rate of inflation in the country means that the property market experienced a fall in real terms of 8.10 percent. Widescale scandal and political manoeuvring are affecting Brazil’s government and its economy. The value of the real continues to fluctuate, unemployment has risen and banks have become reluctant to lend to potential buyers. As a result the housing market has contracted.”

“‘If at first, in a growing economic cycle mortgages were cheaper and in high demand, now there is a reversal of these factors, as interest rates are high and credit scarce,’ says Eduardo Zylberstajn, the Fipezap index coordinator.”

From This Is Money in the UK. “Property sellers in some of London’s most prestigious postcodes are having to lop thousands of pounds off the asking price in order to sell, a global estate agent says. Hardest hit have been home values in Knightsbridge, Knight Frank says. In the last year, prices plummeted 6.8 per cent. Tom Bill, head of London residential research at Knight Frank, said: ‘There is a growing recognition on the part of vendors that the prime central London property market is no longer on the upwards trajectory it was in the years following the financial crisis. Asking prices are typically declining by in excess of 10 per cent to attract price-sensitive buyers.’”

“Another reason prices are falling is that bankers’ bonuses are not as good as they once were. Nick Miller, head of corporate and institutional banking at executive recruitment company Odgers Berndtson, said: ‘The banking industry is finding a new normal and the heady days of old are, in most cases, a distant memory.’”

Voice of America on Russia. “Russians who took out mortgages in foreign currencies have been hit hard by the drop in value of the ruble, and many are struggling to make payments or are facing eviction. In recent months, groups of dollar and euro mortgage holders have held protests at Russian banks demanding restructuring of loans. Single mother Tamara Makoeva was paid in U.S. dollars when she took out a mortgage in 2006, also in dollars, to buy an apartment in a new building that was under construction. She wanted to stop throwing away money on rent and invest in a home. But, as the 2008 economic crisis hit Russia, her salary was switched to rubles.”

“Construction delays on the building forced Makoeva to keep paying rent for a place for her and her daughter. She says monthly payments on the unfinished apartment cost more than half her salary. ‘I am already two months late with payments,’ says Makoeva, ‘because it is impossible with the present rate of exchange, as it is either pay out the mortgage or feed the child. So if I don’t reach a compromise with the bank, I’ll have to give up the apartment.’”

Al-Monitor on Turkey. “Over the years, the only sector in Turkey that hasn’t disappointed investors seeking high returns has been housing. The trend continues, although there are fears that it may be a bubble that could burst soon. Ahmet Buyukduman, known for his assessments of Turkey’s housing sector, spoke to the claims that Turkey is experiencing a housing bubble. ‘I don’t see a bubble or a problem with housing prices. But Istanbul is different. Here, prices are devoid of economic rationality. Istanbul is the least advantageous city to buy a house, and this pace of price hikes cannot be sustained,’ he told Al-Monitor.”

The Nation Online in Nigeria. “On the walls of several new and renovated buildings in Lekki and on Victoria Island, hang weather-beaten inscriptions: ‘To Let /Lease, contact….’ The situation is the same in other city centres. Not a few houses have been unoccupied for more than two years in some areas. The development is attributed to several reasons. One of such is the high cost of rent placed on the vacant structures. In times past, owning a property or living on Victoria Island used to be s status symbol for the super rich. However, the fortunes of the highbrow area seem to have nosedived. A lot of buildings are unoccupied in the area. A walk around Victoria Island and Ikoyi will portray the reality of vacant flats and buildings begging for tenants.”

“A property developer, Mr. Kayode Oyedele, confirmed the high vacancy rate on Victoria Island. ‘I will advise that developers should become more realistic and also work in tandem with current economic realities to beat the property glut,’ he said. ‘If a person earns N2 million per annum, do you expect such a person to spend N1.5 million annually on rent?’ he asked rhetorically.”

South China Morning Post on Hong Kong. “Barely more than a quarter of eligible buyers for a subsidised flat in a Kai Tak housing project made a purchase on Tuesday amid a cooling housing market in Hong Kong. Just 19 units were sold on the first day of a four-day sale for the 338 flats of De Novo, a development by the Urban Renewal ­Authority. Midland Realty chief analyst Buggle Lau Ka-fai said De Novo flats faced competition from other private flats offered in the property market, which now shows signs of cooling.”

“‘It’s now a buyers’ market, meaning buyers have relatively more choices, and they will look beyond just De Novo,’ said Lau, who observed prices of secondary homes in the city on average dropped 5 to 6 per cent in the first quarter this year.”

“One eligible buyer, surnamed Kwok, said he did not make a purchase because he felt the discount was ‘too little.’ Sizes of the subsidised flats being offered range from 332 sq ft to 568 sq ft. Selling prices, set after a 20 per cent discount of the market value of the flats in December last year, range from HK$3.411 million to HK$6.627 million.”