The Fear That There Is An Oversupply
The Saskatoon Star Phoenix reports from Canada. “It took Dennis Wells almost a year to sell his Forest Grove condominium. When he sealed the deal a few days ago, the two-bedroom unit went for $165,000 — more than $25,000 less than the asking price. ‘The market’s not there now … I mean, you can buy a brand-new one now for $170,000,’ said Wells, who bought the ground-floor apartment for about $56,000 in the early 1980s and spent thousands more renovating it last year.”
“Wells’ experience is likely reflective of the city’s real estate market. ‘Basically, you’ve got a ton of condo conversions that were sold, maybe to speculators, during the boom times, and some of those are being unloaded now,’ said Norm Fisher, a veteran real estate agent and owner-broker at Royal LePage Vidorra. ‘Combine that with maybe an overenthusiastic construction market that has really sort of overbuilt apartment-style condos the last few years, and that adds up to lots of inventory.’”
ABC News in Australia. “NICAD Developments, which builds blocks of up to 20 units, mostly in Brisbane’s inner-north, said concerns about a potential unit glut had scared off some buyers, who were worried their purchases could be worth significantly less in just a few years. ‘There’s definitely fear,’ said Adam Nicolo, who runs the company. ‘In particular, I’ve had two units signed and contracts crashed, based on the fear that there is an oversupply in Brisbane. There’s a lot of stock on the market; we’ve had a boom in construction, and the proof in the pudding so far is how quickly people are buying up or selling their stock.’”
“Brett Evans owns two investment units in close proximity to Brisbane’s CBD, and is unfazed by speculation about a fall in apartment values and rents over the next few years. ‘I bought these units with all the intention that if I have to drop the rent to $200 a week to put someone in it, I’ll do it,’ he said.”
“But Mr Nicolo said owner occupiers were taking a much more cautious approach. ‘Before, when things were hot, they didn’t have much time to think about their purchase,’ he said. ‘Now, we’ve gone back to a more normal market, where there’s a lot of choice and there’s not as much pressure on the potential buyers to buy something straight away. They’ve got time to assess things, come back, and there’s no urgency for them to buy.’”
From Macau Business Daily. “A group of Macau homebuyers in Zhuhai are seeking help from the MSAR government for what they consider to be a fraudulent development plan of a high-end property, called Hills Beyond Sea in Zhuhai. About 200 Macau residents, who bought properties in Hills Beyond Sea, signed a petition letter, complaining about the ‘false promotional plan on the property they bought.’ In addition, the property developer offered the buyers the ‘most expensive price for the property in the district in Zhuhai,’ when it ‘is not worth the high price,’ the group complains. One square meter in the property cost about RMB10,000 (US$1,522), the highest selling price in that district.”
“About 200 units were sold to Macau residents, accounting for about 25 per cent of the total residents at Hills Beyond Sea, including some 120 units that were bought by Macau residents for investment purposes. The entire property contains about 900 units in total. The residents have all reached out to the Zhuhai government and different departments of the government, including the property developer, for help since August last year. However, the property problems continue. ‘Some of the residents even sold their properties in Macau in order to buy a unit in Zhuhai, but they are now facing the uncertainty of not having a home to live in, both in Macau and Zhuhai.’”
The Bangkok Post in Thailand. “The government should help home buyers to get mortgage loans more easily as tough loan approval criteria are obstructing housing demand Anant Asavabhokhin, chairman of developer Land & Houses Plc, said. Peerapong Jaroon-ek, chief executive of SET-listed developer Origin Property Plc said banks should classify home buyers and market segments when applying strict lending rules. ‘Banks should not apply stricter lending rules for all customers, or the whole segment, as not everyone has a problem of financial discipline,’ he said.”
“For SME developers, market surveys and research are a must to survive, said Mr Peerapong. ‘Small-and medium-sized developers should apply a customer-centric approach. They should study demand as land prices today are so high that just any property development is not feasible,’ he added.”
“Kwanchai Yingcharoenthawornchai, managing director of new property developer Alternative Asset Plc, said property investment for individual investors would change this year as the market had changed. He added investment in condos for rent in the inner city was also sluggish as rents were not rising. In some locations where yield had been as high as 8%, it had dropped to only 3-4%. ‘In the past four years, speculation and short-term investment was very good. Many speculators could make a profit from selling a presale condo during a downpayment period. But this year it will be not that good due to the sluggish economy,’ he said.”
The Nation Online on Nigeria. “The real estate sector has been badly hit by current economic realities as several houses have been built without tenants to rent them. Tenants, who were meeting their rental obligations have resorted to either moving out of their apartments or defaulting in payment. Former President of the Nigeria Institution of Estate Surveyors & Valuers (NIESV), Mr. Bode Adediji said: ‘Landlords have exotic houses, but with no effective demand from tenants; with the series of retrenchments in the banking, oil and information technology (IT) sectors, which were the toast of landlords as tenants, landlords have become the first casualties with high rental defaults.’”
“Vice Chairman, NIESV Lagos Branch, Mr. Orimalade Olurogba said 80 per cent of all properties under his management now had defaulting tenants who were previously meeting their obligations. He said: ‘What is most worrisome about it is that the sectors, which were termed to be secure, such as the oil and gas industry, are now the jobs that are most insecure. Some are even moving to cheaper accommodation; the ‘ideal and choice tenants’ that most landlords look forward to occupying their properties are currently defaulting because of the uncertainties in the economy.’”
The Manchester Evening News in the UK. “Since splitting from Oasis back in 2009 Noel Gallagher has gone on to forge a successful solo career, but one decision which has proven rather costly was his venture into the property market. The rock n’ roll star, 48, bought this end-of-terrace house in London’s Little Venice in 2010. Situated on the banks of Regent’s Canal, he is now looking for £11.5m for the house. But the singer is struggling to find a buyer for the property since putting it on the market last year and with no sign of a buyer coming in, it looks like he’s gonna have to just roll with it.”
“Some might say it’s surprising to see such a fantastic home stagnate on the market for so long but Henry Pryor, an independent property buyer isn’t shocked at all by Noel’s situation and sees it as being very much the norm in the current climate. He said: ‘Even celebrities aren’t immune to the changing London housing market. The most expensive homes are now 10%-15% lower than they were a year ago as sales volumes have fallen by a half. A blue plague or a celebrity connection may help you to get noticed but it doesn’t seem to add much to the price todays buyers will pay. The biggest worry for high profile sellers is if the market has further to fall and the prospect that some may find that they can’t sell at all.’”
