September 25, 2017

See Who’s Swimming Naked

A report from My Kawartha in Canada. “Prospective homebuyers are looking at reduced costs, longer listings and less bidding wars. At least for now. Following Peterborough’s hot spring market which drove costs up, realtors are saying prices have gone from a boil to a simmer. Leona Lambert owns a farm in Cavan Monaghan Township and has been trying to find a nearby property for her daughter to run her own farm. She says one nearby property’s price recently dropped from $799,000 to $699,000 and its still overpriced. Lambert says she’s seen old rundown homes with small lots sell for high prices. One property she looked at ‘only had two acres and they’re asking almost $700,000 for it.’”

“She says one problem is real estate agents marketing properties near Peterborough as having the potential to be developable lands, driving up the prices. The result is buyers being scared away, says Lambert. ‘Everybody thinks their place is worth so much money so they’re putting it up for $200,000 more than it’s worth,’ she adds.”

The Richmond News in Canada. “A Hong Kong woman is suing her her ex-boyfriend, demanding he be removed from the title of a single-family home she claims to have bought under his name to avoid paying a 15 per cent tax on residential properties for non-residents. According to a notice of civil claim filed in B.C. Supreme Court on Monday, Jennie Ka Yu Wu is asking to have Richmond resident Johnny Pak Shing Chu removed from title of the property, a new single-family home at 7488 Langton Road.”

“BC Assessment shows the last sale date for the property was Jan. 11 for $2,349,000. It is a new home built on the site of an old duplex. The property was valued at $2,248,000 as of July 1. So, roughly $350,000 in taxes, targeted for social housing for poor people, was avoided by transferring title to the Richmond resident. Asked if he has seen or heard of more of such cases, Surrey-based real estate lawyer Jon Singh said he couldn’t say anything for certain but his guess would be there are or will be more. ‘As Warren Buffet says, when the tide goes out you see who’s swimming naked.’”

The Western Investor in Canada. ” A year after the introduction of Canada’s first foreign-home buyer tax drove Metro Vancouver sales down 44 per cent, the three most popular markets for foreign buyers have yet to recover. West Vancouver, Richmond and the Westside of Vancouver – all areas with the highest proportion of foreign buyers prior to the implementation of the 15 per cent tax on August 2, 2016 – are all seeing lower sales now than in 2016.”

“Only 52 detached houses sold in West Vancouver this August, down from 72 in August of last year and benchmark house prices have fallen by 6.3 per cent, the biggest drop in the Metro region. Realtors say the price plunge is more dramatic at the high end of the market. ‘There, we have seen price reductions of 20 per cent to 30 per cent,’ said Brent Eilers of Remax Masters Realty in West Vancouver. According to Eilers, foreign buyers today immediately discount any asking price by 15 per cent to compensate for the tax ‘and then begin negotiations downward.’”

“He points to a view-property house on Russett Way in West Vancouver that was listed last year at $4.6 million. After four price reductions, it recently sold for $2.8 million. ‘The market is extremely sluggish,’ Eilers said. ‘It is a hell of a lot better time to buy now than last year,’ he said, but he suspect that prices for higher-end houses will continue to decline. ‘Eventually, sellers have to adjust their price.’”

From Bloomberg on Australia. “On a wet, midweek evening when most Australians are home cooking dinner, fewer than a third of the lights are on in the apartments in Melbourne’s Docklands. These ‘ghost towers,’ as the high-end residential property with three-bedroom apartments costing almost $1 million have been dubbed, are popular with Chinese investors who mostly live abroad. Their darkened blocks loom as sparsely occupied symbols of a property market where even solidly middle class households have increasingly found themselves priced out.”

“Now, policy makers are seizing on public resentment and hitting foreign buyers with more taxes. New South Wales has doubled its surcharge when foreigners purchase residential property, and Western Australia has added a new tax as well. More controversially, both the conservative federal government and the left-leaning one in Victoria state that includes Melbourne this year imposed additional taxes on properties deemed to be empty for six months or more.”

“Australia’s moves are part of a growing global trend, primarily in response to the massive amounts of capital that have poured out of China and into real estate around the world. Additional taxes targeting vacant homes are already in place in Vancouver and some London boroughs, with Toronto and Dublin mulling similar moves. Liu Yumei, a 52-year-old restaurant owner in Suzhou, China, is rethinking her plans. Her A$290,000 two-bedroom Melbourne apartment has been empty since 2013, other than for a brief family holiday. Citing the risk of it getting ‘messy and old,’ Liu said fears about damage stopped her from renting out the apartment, which was bought in anticipation of her son eventually living there during his university years.”

“The new vacancy tax for her unit would exceed $2,200 a year — enough to cause her to look into renters or AirBnB. ‘Some friends are educating me that rental income could be high in Australia and I shouldn’t miss it,’ said Liu, who has friends in Melbourne to help with arranging AirBnB stays.”

From The Australian. “Apartments bought off the plan at the start of Brisbane’s unprecedented unit-construction wave are selling at losses of up to 36 per cent, underscoring concerns from the Reserve Bank about the city’s concentrated inner-city market. Property searches of high-rise apartment towers in Hamilton, Bowen Hills and Fortitude Valley built about five years ago show most sales this year had been at a loss.”

“The heaviest falls were a $152,000 plunge from an original price of $522,000 for a Hamilton two-bedroom unit with river views; a $150,000 decline on a smaller two-bedroom unit in the same complex; and a $145,000 loss on a $400,000, 60sq m unit in Bowen Hills. RBA assistant governor Luci Ellis last week said it was ‘crunch time’ for Brisbane’s potential oversupply but warned the older apartment market was particularly vulnerable to price falls.”

“Andrew Coronis, managing director of Coronis real estate agencies across southeast Queensland, said price drops of 20 per cent to 25 per cent were not uncommon for resales after off-the-plan buys. ‘It is just time to sit and ride it out if you can,’ he said. ‘If rents drop a bit the yields still aren’t too bad. If you do have to sell, it’s better to do it now. I don’t believe it will get better in the short term.’”

From Domain News in Australia. “Dark days lie ahead for Australian luxury car retailers as sales screech to their biggest annual decline in more than five years. But those numbers could also hold a hint or two about the state of the housing market. Experts worry a slump in luxury car sales is a canary yellow Porsche in the coalmine for the health of the Australian economy and, in particular, house prices.”

“Just last year analysts noted record high luxury car sales as proof of the robust performance of the Australian economy – that indicator appears to have well and truly reversed course as Australia’s Rich Listers move to tighten their belts amid growing uncertainty. ‘In the past, when the top end of the new vehicle market has peaked it has signalled slowdowns,’ CommSec chief economist Craig James told Domain, referring to luxury car sales as a ‘confirming indicator’ of house prices.”

“Looking beyond the toys of bosses and successful entrepreneurs, recent Westpac data shows Australians are feeling downbeat, with the Consumer Sentiment Index notching up its 10th consecutive negative week in September. Specifically, only 10.5 per cent of respondents nominated real estate as the ‘wisest’ place for savings – the lowest number in 40 years.”

“Westpac senior economist Matt Hassan seconded Mr James’ comments, saying an air of caution is seeing Australians leaving their wallets in their pocket. ‘Vehicles are the bellwether of discretionary spending,’ Mr Hassan said. ‘When consumers become more concerned about job losses they put off purchasing vehicles.’ Simply put – if people no longer feel their double-digit annual house price gains are a sure bet, then they’re disinclined to spend big on a Lexus.”