The Sky Is Not In Fact The Limit
A report from Bloomberg on Japan. “Land prices in Tokyo’s central Chuo ward, home to the famous Ginza shopping district, have jumped by 51 percent in four years. In Osaka, they are up by nearly half. Booming construction of hotels, office buildings, shopping centers and apartments, financed by record lending for real estate by Japanese banks, has driven the gains. Shinichi Hasegawa, the head of the Singapore office of real estate consulting firm B-Lot Co., whose clients are mostly foreign investors, shrugs off any pessimism over Japan’s property market. ‘Japan is very cheap from a global perspective,’ Hasegawa said. ‘I have no complaints about the BOJ’s monetary stimulus,’ he said. ‘They are just so helpful.’”
“Signs of excess supply are already appearing in Tokyo’s housing market. Unsold new apartments and new housing for rent in Tokyo both reached multi-year highs last year. Satoshi Horino, president of Mori Trust Asset Management Co., said he is hearing stories about appraisers calculating returns based not just on purchase price and income, but by adding further price gains, a bold assumption in a country afflicted by price declines for years. He sees this as a contrarian indicator, another sign a reversal is coming.”
“‘It shows land prices have come to a pretty good level,’ Horino said. ‘Prices will fall but I just don’t know when. There is an oversupply of properties — no doubt.’”
From The Sun on the UK. “Average UK rents have fallen for the first time in almost eight years, according to new data. This is the first time since December 2009 that rents have fallen on an annualised basis, according to the latest HomeLet rental index. London has seen the biggest decline over the past year. As well as falling rents in the capital, four other regions of the UK saw rents on new tenancies decline last month.”
“HomeLet’s CEO Martin Totty said: ‘May 2017 saw average rents nationally fall for the first time in eight years when the economy had suffered the shock of the financial crisis. HomeLet rental data suggests landlords are now facing a difficult balancing act between ensuring rents are affordable for tenants in a low real wage growth environment whilst covering their own rising costs.’”
From Norway News in English. “The latest statistics for housing sales in Norway show that prices have indeed tumbled during the past month. In Oslo, the price fall was more than expected, and marked the weakest month of May in 14 years. New, stricter lending rules clicked in from January 1, at the same time there’s been a homebuilding boom, and that’s widely credited for the downturn aimed at halting double-digit price rises in the Oslo area.”
“‘This is the weakest May we’ve had since 2003,’ Christian Dreyer, head of the real estate brokers’ organization Eiendom Norge told state broadcaster NRK. ‘Housing price growth is abnormally weak.’”
The New India Express. “The house rent market in Bengaluru which has enjoyed inflated pricing in the recent years, primarily riding on the affordability and demand from the IT sector, is now witnessing a slump following job cuts. Residential rents are coming down by up to 10 per cent, with at least Rs 3,000-4,000 drop in rentals for a 2BHK, according to real estate agents in the city. The trend is likely to continue until the stress in the IT sector eases out, agents said.”
“Realtors say while earlier if a house owner quoted Rs 20,000 for a 2 BHK, there would be three or four people in line to take up the house at that price. If someone was eager to occupy it immediately, they would even offer to pay a thousand more. However today, people are negotiating for lesser price and are willing to pay only the minimum amount. ‘The rents have come down by 10-12 per cent and this trend is likely to continue for some more time,’ said Sajid, manager, residential sales and marketing, Silverline Realty Pvt Ltd.”
The Global Times on China. “Apartment rents in first-tier cities have been falling as supplies increase and demand shrinks amid slowing transactions for homes, indicating a steadier property market overall, according to experts. Rents for Shanghai apartments ended a 90-month string of rises in January, data from the Shanghai housing rental index office showed, according to a report by domestic newspaper International Financial News.”
“In recent years, fewer people have moved into Shanghai and the number of permanent residents (those with hukou) has deceased in the past two years, Hui Jianqiang, research director with real estate information provider Beijing Zhongfangyanxie Technology Service, told the Global Times. Also, Hui noted, supplies have been improving relative to demand. Lower rents will help steady the market overall, because people won’t be in a panic to buy, according to Hui.”
“‘With transactions of homes cooling in first-tier cities, some owners won’t sell their properties but will instead offer them for rent, releasing more supply and driving down rents,’ Yan Yuejin, research director at Shanghai-based E-house China R&D Institute, told Global Times.”
From West Australia Today. “Talbot Le Page Homes is the latest WA builder to go bust, an Australian Securities and Investment Commission announcement has confirmed. Turquoise Developments, trading as Talbot Le Page, specialised in high-end custom homes across Perth. Housing Industry Association executive director John Gelavis said insolvency happened across all industries and housing was one of WA’s largest industries.”
“He said things were actually looking pretty good for people wanting to build in Perth. ‘The time it takes to build a home has also decreased dramatically because of a significant increase in the availability of trades contractors … who were previously flat out in the mining sector up north,’ he said. ‘The cost of materials has also improved based on the drop off in demand.’”
From CBC News in Canada. “The latest real estate numbers out of Toronto this week show a marked slowdown in terms of prices and sales volumes. The Toronto Real Estate Board revealed Monday that the average price of a home in the GTA was $863,910 in May, down more than six per cent from last month’s level. And the volume of sales was also lower, down by 12 per cent. ‘The market has changed,’ says Christopher Alexander, a regional director at Re/Max Integra, one of Canada’s largest home sellers.”
“Real estate lawyer Mark Weisleder says sellers in the current market are waking up to the new reality that the sky is not in fact the limit when it comes to price. ‘I think we had a little bit of a storm,’ he says. ‘Not a great storm but we had a storm.’”
“Sellers who are feeling the squeeze the most, Weisleder says, are those moving up in the market who are banking on selling their existing place to finance their next purchase. ‘They bought before the government announcements and now they are trying to sell,’ he says, and ‘they are having some difficulty selling for the price they thought they would get in order to afford the new home.’”
“Some of them may be tempted to try to wriggle out of a purchase, but walking away from a deposit or contract of sale isn’t consequence-free, he warned. ‘From a legal standpoint if you don’t close a purchase and a seller sells for less money, you are responsible for that loss,’ he says.”
