June 5, 2017

It Appeared That Demand Would Never Be Satisfied

A report from the Toronto Star in Canada. “Toronto region home prices have dipped slightly from April to May — down $55,604 on average — but still 15 per cent higher than May 2016, as the supply of re-sale house and condo listings rose 43 per cent year over year. There were 18,477 listings in May compared with 12,931 the comparable month last year. In Toronto alone, there were 1,611 more homes on the market than in April. It is the third consecutive month that listings have increased although May saw a significantly higher number of homes hitting the market. The province’s cooling plan, including a foreign buyer tax and expanded rent controls, started a discussion, said Royal LePage Signature Realty agent Tom Storey. ‘Whether or not something’s actually changing, you end up with people talking about it and things are going to change,’ he said.”

From The Telegraph in the UK. “It’s comfortably above the price of the average UK home, but £350,000 is merely the cost of a so-called ’sweetener’ when the international super-rich are shopping for a multimillion-pound property. When one such buyer viewed a £25 million mansion in Mayfair shortly before Christmas, the vendor offered his Rolls-Royce Phantom – worth £350,000 – as an incentive to persuade the high net-worth individual to sign on the dotted line. It did the trick.”

“Michael Ferris, the property director whose firm JR Capital invests in UK property on behalf of wealthy clients from the Gulf, says the luxury London market has slumped since the back-end of 2015 due to an arsenal of Government measures designed to make London a less lucrative piggy bank for oligarchs’ cash, compounded by political uncertainty. ‘Developers have had to grin and bear it over the last 18 months to get the deals over the line,’ Ferris says. ‘It’s been a buyer’s market, so they have been able to ask for incentives.’”

From Al-Monitor on Iran. “The ‘Iranian dream’ is the same around the world. Until recent years, the demand for housing was amplified by a volatile economy in which real estate presented the safest option for investment. This made housing one of the most prosperous sectors of the national economy. Few believed that the sector’s growth would slow, as it appeared that demand would never be satisfied.”

“Despite the increased demand for rental properties, the number of empty homes in Iran has increased. The Statistical Center of Iran announced last year that one out of every 10 residential properties in the country is vacant. The same survey revealed that more than 2.5 million housing units in Iran are unoccupied — 55% more than in 2011. Meanwhile, neither the Rouhani administration nor local authorities have proposed measures to increase taxes on empty homes. Thus, the reality may be that the core issue plaguing the Iranian housing market is not decreased demand but reduced supply — especially given the climate in which property owners refuse to sell at a loss.”

The Financial Express on India. “Prospective homebuyers perhaps seldom had it so good. From a significant fall in property prices to the lowest home loan rates (in a decade) combined with the power of RERA, almost everything seems to be in favour of those who want to buy or invest in a piece of residential property currently. Therefore, a question playing on the mind of many buyers and investors today is – is this a good time to buy a house?”

“‘It is very rare to see such a confluence of amenable and conducive market conditions for end-users and investors in Indian residential real estate. Prices are at their lowest now and unlikely to fall any further. There has also been a significant reduction in home loan interest rates, and many developers are offering interesting financing schemes as well as various other incentives and offers, including hard discounts,’ says Anuj Puri, Chairman, JLL Residential.”

“It is a well-known fact that residential real estate market is in a slump as builders are currently sitting on excess inventory of approximately 46 months across India. Assuming that the demand for housing will remain constant, it will take almost 4 years for all residential units to be completely sold out.”

“‘The harsh reality about investing in an apartment is that the supply of units is controlled by builders. So, in the long-run, if the number of units are going to increase in proportion to the demand, there will be no resale value for existing apartments. In fact, they are likely to depreciate due to the supply factors. Unless there are restrictions placed on the number of apartments that can be built, buying a house cannot be a lucrative investment,’ says Tejas Khoday, Co-Founder of FYERS, a thematic investing platform for young investors.”

From CNBC on China. “China has constructed more skyscrapers than any other country every year for nearly a decade, according to the Council of Tall Buildings and Urban Habitat. And the most iconic edifice in these transformed skylines is Shanghai Tower, a shiny column that spirals 128 floors and 632 meters into the clouds, making it China’s tallest building, and the world’s second-highest. But Shanghai Tower reflects wider woes in China’s commercial property market, as it has struggled to attract tenants since the last beam was placed on top three years ago. Experts say the challenge is that companies looking to cut costs amid a wider growth slowdown are now spoiled for choice.”

“Entire floors of Shanghai Tower continue to sit empty. A planned luxury hotel has yet to open and hallways remain deserted. About 60 percent of the office space has now been leased out, but only one-third of those tenants have moved in, said JLL. ‘With more and more skyscrapers in Shanghai, in cities [in China], the vacancy will remain very high for some time,’ said Anny Zhang, head of Shanghai office leasing for Jones Lang LaSalle, one of the agents for Shanghai Tower.”

From The Australian. “A looming apartment supply overhang is set to put more downward pressure on prices after apartment values in Sydney and Melbourne dropped more sharply than houses over the past month, dragging on the broader housing market. The supply increase makes it more difficult for landlords to find tenants, making them ‘very cautious’ about the prices they are willing to pay, BIS Oxford Economics senior manager for residential property Angie Zigomanis said. ‘It should keep putting pressure on prices.’”

“Kerry Williams, a 49-year-old social media manager, yesterday made an offer on a one-bedroom apartment in Elwood, Melbourne. She saw the softening market as an opportunity to make a long-term investment, picking a structurally solid unit in a small block in an area she hopes will be attractive to tenants. She has bought 15 properties in her life and currently owns four. ‘This is the first time in five years that agents have returned my calls. Normally I’m chasing them,’ she said.”