The Housing Bubble

A report from the Calgary Herald in Canada. “Calgary’s housing market showed signs of weakness in the face of high unemployment and sluggish population growth, as the pace of residential construction took a nosedive last month over year-ago levels. Construction began on 630 homes in the city in October, a more than 40 per cent decline from housing starts posted a year earlier, the Canada Mortgage and Housing Corp. reported. According to analyst Richard Cho, demand for new homes — especially condos — waned as Calgary’s economy was battered with job losses and sluggish income and population growth, while supply remains high.”

“The Calgary Real Estate Board said last week the 16 per cent jump in the number of homes sold in October, compared with the same month last year, may have been due in part to home buyers avoiding tighter mortgage rules, which came into effect mid-month. The surge may also be linked to falling prices and the availability of lower-priced homes, the board said.”

From The Times on the UK. “At last, some good news for renters. Or at least those looking for four- to six-bedroom family houses in the more salubrious parts of the home counties. Thanks to a slowdown in sales at the prime end of the country market — due to the limbo between the EU referendum and actual Brexit, as well as off-puttingly high stamp duty — there is now an excess of luxurious homes within commuting distance of London. Some landlords are so keen to have tenants in for the winter that they’ve slashed rents, with some offering lets as short as three months.”

“‘The balance of power has tipped in favour of tenants, with landlords showing flexibility around rents to minimise void periods,’ says Oliver Knight, research analyst .”

From Bloomberg on Russia. “Signs of a housing glut have already begun to appear in Moscow, with more newly built apartments on the market than any time in the last decade, according to IRN.ru, an analytical center that monitors the capital’s real estate market. Short of renewed state efforts — set to lapse in December — the market will likely stall as people’s ability to make the large down payments has been depleted, according to Olga Shirokova, head of consulting and research at Knight Frank LLP in Moscow.”

“‘Real estate prices aren’t going to increase given the amount of offers on the market,’ Shirokova said.”

From Firstpost on India. “As cash disappeared, sales halted, transactions got cancelled and a lot else happened ….leaving people aghast. In the real estate business, where only 30 percent payment is done through cheque and the rest through cash, the PM’s magic move to juggle away the cash has left the builders and brokers in a tighter situation than ever, and at the same time hitting the sector hard which is already in a slowdown position. Now, the move has put it in a halt mode.”

“From buyers’ perspective, hopefully, developers’ scrunched up situation may force them to do desperate selling. So, buyers should feel elated as brokers estimate that real estate prices will nosedive by no less than 10 percent within a week and hopefully 20 percent within a month’s time. Those who are sitting on large stocks of unsold units, what will happen to them? ‘I shudder to think of developers who have a huge pile of inventory, they will be in deep trouble. Eventually, they will have to reduce prices,’ Dhruv Agarwala, Chief Executive Officer, PropTiger.com said.”

The Times of Oman. “Isaaq, owner of a leading real estate company in Oman, said the lower occupancy rate has forced him to decrease the amount of rent being charged this year. ‘There is a big drop in demand for residential and industrial rental. We had to slash rents by nearly 30 per cent to match consumer demand this year,’ he said. Um Tariq, an apartment owner, said that profits from rentals will be affected if she lowers her rental price much further. ‘I used to rent out my apartments for OMR500 per month, but because of crunch I lowered it to OMR400, then again until it is now OMR 325. I couldn’t go any lower or else I’ll lose out on my profits,’ she explained, citing the high cost of maintenance and utilities.”

“An owner in Al Hail observed, ‘Last year we were renting our penthouse at OMR850 a month. Now we get OMR500 for the same place, one year on. It’s difficult for people who bought these properties as investments to go any lower.’”

“‘The rent being reduced is very good because business has been slow for a while now. If rents go down, it means people have more money to spend on purchases,’ said Manoj, a resident and small business owner.”

From Focus Taiwan. “Prices of residential and commercial property in Taipei, the most closely watched market in Taiwan, for 2016 fell about 11 percent from 2014, reflecting the government’s efforts in curbing skyrocketing home prices in the country, according to Sinyi Realty Inc. However, some analysts believe the market is still overpriced and could be headed for a much bigger drop in prices in the next few years due to the declining birth rate in Taiwan, and the relatively small number of immigrants moving here.”

“Compared with Taipei, home prices outside the greater Taipei area are more affordable, but many wage earners in the country still cannot afford to buy a home because of the low salaries here and prices hiked up by years of speculation.”

From MENAFN Press on Australia. “Mortgagee Property Ltd (HK) is offering property developers an exit strategy as the Australian housing bubble bursts. With Chinese buyers starting to rescind on apartments, a Hong Kong based real estate marketing company specialising in Australian distressed real estate is offering property developers an exit strategy for unsold and settlement risk apartments (unsettled). The company is seeking distressed apartment stock to service a mammoth client list of bargain hunting property investors.”

“‘Smaller mum and dad type property developers with unsold apartments that failed to settle or were never sold will become ‘Egyptian Stock’ when the property bubble bursts, that could send many property developers to his or hers financial tomb.’ Said Scott O. Talbot, Australian founder of Mortgageeproperty.com.”

“In recent articles, off-the-plan apartment sales that fail to settle are confirmed by the Australian Taxation Office as secondhand apartments, lowering the resale price even further.”