All The Symptoms Were There
A report from City AM on the UK. “Analysis of homes listed on Zoopla has found 35.3 per cent of all homes listed for sale in the capital have had their prices cut since they were first listed, up from 29.7 per cent in February. The study, by online estate agent HouseSimple.com, found Richmond is the borough with the highest percentage of price cuts: almost 46 per cent of homes on sale in the borough have been reduced in price. That’s followed by Kingston Upon Thames, where just over 45 per cent of homes have had their prices cut. The news came a day after analysis by Savills showed the number of people leaving the capital has shot up by 80 per cent in the past five years, as high house prices drive buyers further afield.”
“‘What’s unusual about the level of discounted properties is that it would suggest there are too many sellers and not enough buyers,’ pointed out Alex Gosling, chief executive of HouseSimple. ‘But strangely this market is still suffering from a lack of new supply. There are actually plenty of buyers looking, but they’re a different buyer from 12 months ago. They are more cautious and viewing multiple properties before making a decision. Long gone are the days when buyers were diving in to avoid missing out as the market accelerated away from them.’”
The Daily Trust on Nigeria. “Presently there is low demand for real estate in major cities like Lagos, Abuja and Port Harcourt, due to the harsh economic situation of the country. Daily Trust investigations showed that real estate developers find it difficult to sell their houses and as a result could not embark on new ones. Also, many tenants are unable to meet up with their rent payments, leading to vacant residential properties especially in some highbrow locations in Abuja and Lagos.”
“On the suggestion that the current crack down on corrupt Nigerians by the EFCC compounded the lull in property business, as looted money were hurriedly injected into the market in the past to keep their ill-gotten wealth, President of Real Estate Developers Association of Nigeria Mr Chime Ugochuwu affirmed this, but said it will only affect the high end properties.”
“‘That is true but corruption is not sustainable to national development of any nation and therefore you cannot develop your nation based on corrupt funding - those are illicit funds. It is going to affect high-end houses which people cannot afford. Now, we need to be reasonable. Some of the property that we have in highbrow areas like Maitama are not okay. One man cannot have a house of 12 rooms because he cannot have people occupying it with a family of four. It tells us to now invest money in affordable houses where the masses are.’”
The Sun Daily Malaysia. “The government may look into having a single authority to oversee the property market in the near future, said Second Finance Minister Datuk Seri Johari Abdul Ghani. ‘You talk to the the private sector, the affordable house is RM500,000 and you have an issue of oversupply of property. Today, if you look at all the high-end properties in Kuala Lumpur at night, only 10% of the total units is lighted (occupied). The rest in non-productive. You can’t even get tenants. This is unproductive investments of our money in our economy. It’s something that we need to address,’ stressed Johari.”
The Otago Daily Times on New Zealand. “Median house prices across Otago continue to show annual gains, but cracks are appearing in the previously buoyant Queenstown Lakes district where both volumes and prices are down. The number of houses throughout the country that sold for more than $1 million plunged almost 30% from 1099 in June last year to 799 last month. Against last year, sales volumes across the country continued to decline; nationally down 24.7%, Auckland down 33.2%, Otago down 17.8% and Queenstown Lakes down 34%.”
“Westpac acting chief economist Michael Gordon said the REINZ data pointed to a ’substantially softer’ housing market in June. ‘While the slowdown was originally concentrated in Auckland, it’s now spreading to a greater number of regions,’ he said.”
From Domain News on Australia. “A high concentration of inner-city apartments has caused a chain reaction in the Brisbane rental market, leading to rental yields for detached houses falling more than seven per cent in the past year. Stagnant rents and vacancy rates for the Greater Brisbane region hide a more serious problem — investors are now making less returns.”
“Haesley Cush, of Living Here and Ray White, said competition between landlords to set out flashy and new apartments from each other drove down prices of the new builds. ‘If you release 200 units at the same time with very little difference between them, the first one that’s going to rent will be the cheapest one.’”
“Buyer’s agent and property pundit Pete Wargent said the blame did not fall solely on the private or public sectors. ‘It was a confluence of factors; the city plan allowed a lot of new apartments to be built and for a certain amount of time the city council was happier to approve borderline cases but I know now it’s harder for them to get approved,’ Mr Wargent said. ‘The other thing was Chinese buyers, which was a trend that came out of nowhere. I think developers became more confident they could sell apartments to anyone.’”
“Mr Wargent said he was surprised by the lengths property managers and landlords would go to secure a lease. ‘A lot of new dwellings are offering free rent and even $1000 cash back which is extremely unusual.’”
The Globe and Mail on Canada . “House prices have been falling in Toronto. Yes, falling. To many people, that comes as a rude shock. Prices rose for so long that it seemed as if it were the natural state of affairs. The idea took hold that Toronto was somehow unique, its housing market immune to the corrections and crashes that have afflicted just about every city (Toronto itself included) at one time or another.”
“Even now, real estate hucksters and sanguine economists say the current downturn is merely a pause in an unstoppable ascent. All the factors, they insist, point up, up, up. But similar things were being said about London or Orlando before the British and U.S. housing markets hit the skids a few years ago. No commodity keeps gaining value without interruption.”
“The fundamentals are only part of the picture. Psychology plays a part, too. People have a tendency to get carried away when things are going well and panic when they threaten to turn bad. To begin with, the fever has broken. The wild run-up in prices over the past year was a sort of sickness. Seized by the belief that prices could only climb further, buyers afraid of missing the boat were paying obscene amounts for little, rundown houses. Bully bids, bidding wars, inflated over-asking prices – all the symptoms were there.”
“That has changed over the past few weeks. Sales are off and prices are down from their stupid heights of this spring, although in the first half of June the cost of a house was still above where it was a year before. A degree of sanity has returned.”
