The Housing Bubble

A report from Q 13 Fox on Washington. “We’ve heard about Chinese investors driving up local housing prices but it’s rare to hear from them firsthand on why Western Washington is so desirable. On Thursday, a delegation representing nearly 60 percent of Chinese investors interested in our region visited the Eastside. They toured three luxury homes ranging from $5 million to $10 million. Realtors say the Eastside is now more expensive because of Chinese buyers. ‘Personally, for the last two years 40 to 60 percent of my homes, listings, have sold to international buyers,’ Anna Riley of Windermere said.”

“Then why are an estimated 10 percent of luxury homes sitting vacant? ‘The process of getting residences in the U.S. is getting longer and longer,’ said Yi Liu, vice president of China Alliance of Real Estate Agencies.”

From Global News. “Seattle is ’still much more affordable than Vancouver,’ realtor Steve Saretsky told Global News on Sunday. When you combine that fact with the foreign buyers tax enacted in Metro Vancouver last year, along with the perception that there aren’t many great deals left to be had in the city, Seattle’s attraction becomes more and more clear. ‘The prices have been rising a lot there, and I think it’s encouraging more and more investment,’ Saretsky said.”

“B.C.’s foreign buyers tax is ‘working by driving a share of buyers to other cities, especially Seattle,’ said Byron Burley, the B.C.-based vice-president of Juwai.com, a real estate platform aimed at international buyers. ‘It has taken the froth off of the top.’ But in terms of demand from Chinese buyers, search volume data released by the site shows that it’s ‘flat as a pancake,’ he said. ‘It’s very important to remember, however, that Vancouver is more like a pancake than a deflating souffle.’”

From Domain News in Australia. “Despite 2017 marking a bull run of top-end sales in the $20 million-plus range, this year is the first time in five years in which there hasn’t been a single trophy sale to a foreign buyer, to date. And prestige agents say the dearth of foreigners at the top end is in large part thanks to the NSW government’s recently introduced tax slug on foreign buyers. It’s not just the lucrative commissions for prestige agents or windfall to trophy home owners that have been affected by the changes. Sydney’s cache as one of the world’s top emerging international trophy home markets could be collateral damage, according to David Chin, managing director of Australia and China research firm Basis Point.”

“‘Have they overcooked things for that end of the market? I think they have,’ said Chin. ‘Even the fabulously rich have their limits and Sydney isn’t the only glamour city on Earth.’”

“BIS Oxford Economics managing director Robert Mellor said that while he understands why the government introduced the extra charges, they probably did it ‘too late in the cycle when the market had peaked.’ ‘People might think foreign buyers will just keep coming anyway, but if the market is no longer performing and yields are low then foreign investors aren’t going to opt into this market,’ he said.”

From The Sun Daily on Malaysia. “The overhang in stratified properties or apartments and condominiums has worsened, with the number of unsold units rising 40% to 20,876 units in the first half of the year (H1 2017) from 14,792 units in H2 2016. On whether the market will be able to absorb the new supply of homes, National Property Information Centre director Khuzaimah Abdullah said the impact is yet to be seen. ‘I am sure the developers are very prudent people. If there are no takers, no buyers, I’m sure they would hold off construction because once you are into the construction stage, there’s no turning back,’ she said.”

From NDTV on India. “India’s property sector was already battling a slowdown last year, when Prime Minister Narendra Modi’s crackdown on cash quashed any hope of an imminent revival. The high number of unsold units though indicates that a recovery is still some time away. In the National Capital Region, which includes Delhi, inventory stands at around 200,000 units, which would take 62 months to be absorbed; while for financial capital Mumbai it’s at 180,000, or 52 months away from being cleared, according to a report from Anarock.”

“Ritika Mankar Mukherjee, a research analyst from Ambit Capital, is looking at the government’s efforts to force about 50 heavily indebted companies toward insolvency. If successful, these companies may sell some of their property assets to pay down debt. ‘We expect land prices to fall from February 2018,’ Mukherjee wrote in a Nov. 1 report. ‘As land prices fall, it is but natural that real estate developers launch cheaper properties through 2019 and 2020.’”

From The Negotiator on the UK. “Over a third of properties for sale in the UK have had their original asking prices cut since being listed, says the latest Rightmove house price index. At 37% of all existing homes for sale, this is the highest proportion dropping their prices during the autumn months for five years, the portal says. Price cutting following the Summer market high-point is a pre-Xmas tradition within the property market but the proportion of homes for sale being cut in price has been rising over the past three years and is now at a peak.”

“‘In the run-up to the festive season many sellers are trying to tempt distracted buyers to look at their property by dangling the bauble of more attractive pricing given the quieter time of year and more challenging market,’ says Miles Shipside. ‘Many sellers who have been on the market for a while are curbing their initial pricing optimism and are hoping that reducing their property price will result in buyers selecting it as this year’s must-have Christmas gift. The effect is an impromptu Autumn Sale with the largest proportion of sellers on the market having reduced their initial asking prices at this time of year since 2012.’”

From the Irish Independent. “The brother of ex-Westlife star, Shane Filan has revealed he wept the day the singer packed up his family home and left lreland after the pair were left with nothing when the housing bubble burst. Shafin Developments, the property company the brothers established together, went bust in 2012. The singer, faced with a bill of €23m, was declared bankrupt. His brother Finbarr has revealed he was declared bankrupt last Monday to the tune of €15 million.”

“In a column in the Sunday Business Post, the Sligo businessman said ‘guilt, fear and denial’ plagued him in the wake of his brother’s bankruptcy. He wrote: ‘When it came, the drop was bleak and life-changing. The worst day for me was spent packing up Shane’s family house and driving him to the plane in Knock. He was on his way to London that day to start the process of rebuilding his life after being declared bankrupt himself. The guilt I felt at the part I played in him losing his home almost overwhelmed me.’”

“Mr Filan told how he and his brother never saw the crash coming. They took out their first development loan in 2003 and soon the business partners and brothers were going ‘too fast too soon.’ He writes in the Sunday Business Post: ‘Hindsight is never there when you are in the middle of an impending calamity.’”

“He previously told the Irish Independent: ‘There were a few very difficult years where I was quite worried and scared. But you take yourself out of the bubble, and you realise it’s happening all over the world, especially in Ireland.’ Finbarr, meanwhile, is urging others to come to terms with their own financial troubles after he grappled with the ‘fear’ that follows going broke.’”