Frustrated Sellers Who Just Want To Move
A report from CBC News in Canada. “Planned homes in a new Whitby subdivision are on sale for up to $90,000 less than similar homes in the same development were a year ago. Good news if you’re house hunting now. Bad news if you bought into the development a year ago. Last January, Astrid Poei and her husband Sheldon Fisher purchased one of more than 100 lots in Phase 1 of the new Queens Common community. Phase 2 of the Mattamy Homes project re-launched this month with the same sized lots and floor plans offered at lower prices. Poei and Fisher say they were ’shocked’ to find out that homes and lots very similar to the one they purchased are now on sale for $75,000 less than what they paid. ‘It’s painful,’ Poei said in an interview. ‘There are no building materials on site, there is no foundation poured, so I don’t understand how we are paying more than someone who bought a couple of weeks ago.’”
“The answer, according to Mattamy Homes Canada president Brad Carr, lies in what was an unprecedented year of change in the GTA real estate market. ‘Recently prices in the GTA have drifted downwards,’ Carr said in an interview. ‘Obviously we need to respond to be able to sell at prices purchasers are willing to pay.’”
“Despite ’short term ups and downs,’ Carr is confident the homes will appreciate in value over time, as has been the case historically in the GTA, and says buyers who are in it for the long run have nothing to worry about. ‘Just like the buyers are extremely happy in a rising market, they have to appreciate that the same decision could go the other way,’ he said. ‘To come back a year later and see the same house that we bought is now $90,000 cheaper, that’s not cool,’ said Dionne Thompson, who also bought in Phase 1.”
From The Guardian in the UK. “Owners of luxury London properties are having to knock more than £1m off their house prices to sell them. Mayfair-based property buying agent Garrington said homes in the capital’s most exclusive neighbourhoods have been reduced in price by an average of 9%. In Knightsbridge, the most expensive area, prices have been cut by an average of 12% – £927,000.”
“Jonathan Hopper, managing director of Garrington, said sellers are having to take drastic action to realise the value of their homes. ‘There is huge discounting of super prime properties above £5m at the moment,’ he said. ‘A lot are being discounted by 10 or 20%.’ Hopper said that in one example a Knightsbridge home first listed on the market for £20m in the summer of 2016 was in the process of being sold ‘very quietly’ for £15m. ‘They are frustrated sellers who just want to move,’ he said. ‘But this is not happening on the open market, it is all happening behind closed doors.’”
“Henry Pryor, an independent luxury property buying agent, said sales of high-end properties had all but dried up and he expected sales to slow further as the date for Brexit approaches. ‘It’s a Siberian winter out there.’”
The Asia Times on Thailand. “In a report published in December, the Agency for Real Estate Affairs estimated that 397 new housing and condominium projects were launched in Bangkok last year, putting 117,112 new units to the market, up 8% year-on-year. ‘In Thailand, there is no shortage of housing at all,’ says Sopon Pornchokchai, president of the Agency. ‘If this trend goes on in 2018, a bubble burst can be witnessed in 2019 or 2020.’”
“Colliers International Thailand, a property consultant, estimates that some 36,000 condominium units remained unsold in the capital at year end, or about 23% of the new supply. For other realtors, the unsold estimates are even higher. The glut is particularly noticeable in the lower-priced, single unit condominiums that have proliferated along Bangkok’s new mass transit lines, attracting mostly Thai investors buying for their own use or as speculators aiming at the rental market.”
From the Malaysian Insight. “A call has been made for the government to address a potential glut in affordable housing that arose from ever increasing government and private sector schemes, The Edge Markets reported. ‘We don’t want an oversupply of affordable homes like what we had with the PPR (People’s Housing Project) where there was an oversupply years ago,’ said CBRE WTW Kuala Lumpur director Ungku Mohd Iskandar Ungku Ismail.”
“There are 21 non-landed home developments which were completed in the Klang Valley in 2017, supplying an additional 8,300 high-rise homes into the region, bringing the cumulative supply to 46,400 high-rise homes. There will be an incoming supply of about 14,000 high-rise homes entering the Klang Valley property market, Iskandar said. Bank Negara Malaysia, in its latest quarterly bulletin published in November, said the number of unsold residential properties is at a decade-high, with a majority of units being in the RM250,000 and above price category, beyond the income of most Malaysians.”
“The central bank said the oversupply of office space and shopping complexes in the major states is expected to be exacerbated by incoming supply, potentially becoming more severe than during the Asian financial crisis.”
From the BBC on China. “Employees at a brick factory in southeast China who were collectively owed some 90,000 yuan (US $14,050; £10,080) had their unpaid wages topped up in bricks, it’s reported. According to the Xinhua News Agency, some 30 factory workers in Nanchang, Jiangxi province, agreed to receive 290,000 bricks in exchange for 80,000 yuan of their owed earnings. Xinhua says that their employer, who has not been named by local media, is still trying to figure out a way to repay staff the remaining 10,000 yuan that they are owed.”
“The story has ignited lively debate on Chinese social media, with many users of the Sina Weibo microblog expressing concern. ‘Why is it always rural migrant workers that are paid in arrears?’ asks one. Others make jokes at the expense of China’s housing bubble, saying that the situation has become so bad that bricks constitute a decent substitute for finances.”
From Fairfax Media on New Zealand. “There has been a sharp increase in owners selling houses and apartments for less than they paid. One in 10 apartments sold in the third quarter of 2017 went for less than their owners paid for them, according to CoreLogic’s Pain and Gain Report. CoreLogic head of research Nick Goodall said Christchurch saw the highest level of loss-making resales of residential properties. More than 11 per cent of Christchurch homes sold in the third quarter changed hands at a loss.”
“The median length of time loss-making sellers had owned their property was just 4.5 years, indicating some recent buyers of houses and apartments had ditched their investments when the capital gains they had expected did not materialise, Goodall said. ‘This may be a sign of market fatigue with buyers choosing to cash out of the market rather than risk holding the property and potentially experiencing further loss,’ he said.”
Investors bore the brunt of loss-making sales, CoreLogic found. The median loss for Christchurch home-owners who sold for less than they paid was $39,000. The median loss-making seller in Auckland was left $34,000 out of pocket, before selling costs are taken into account.”
From News.com.au on Australia. “It could be a bad year for housing prices if building approvals are anything to go by. With the housing market teetering on the edge of a serious downturn, apartment developers seem to be having a ‘last blast.’ Building approvals data released last week shows a serious uptick in the number of homes that were approved. The timing of this big push is fascinating because November is exactly when Australian capital city housing prices started falling. The developers didn’t know in advance that was going to happen, but they might have sensed it. After all, what could drive such a big uptick in building approvals is the sense that it is now or never.”
“It’s curious there’s still many apartments being approved in Victoria, after real estate agent Mariecris Tagala last year claimed more than half of new apartments in Melbourne’s CBD, Docklands, and Southbank have sold at a loss since 2011.”
“Markets are supposed to co-ordinate supply and demand. But that’s a hard job when supply takes a long time to come online. If you’re halfway through building a big development when the market falls by 10 per cent, you’re in a bind. The losses involved in finishing the properties and selling them for less than they cost to build will almost certainly be smaller than the losses involved in abandoning the project, so you have to push on to get at least some money back. This is the essence of the boom and bust cycle that characterises property.”
