Are We Doing This? Are We Having A Downturn?
A report from the Globe and Mail in Canada. “It has been two years since the provincial government, then led by the B.C. Liberals, slapped a 15-per-cent tax on foreign buyers in the Vancouver region. In February, 2018, the B.C. NDP minority government raised that tax to 20 per cent and also expanded its reach to include other urban areas in British Columbia. The price for detached houses sold in Vancouver in June averaged $2,550,708, down 12 per cent from $2,899,698 in the same month in 2016. The city’s condo market peaked in January this year and the townhouse segment hit new highs last August. The average price for attached properties sold in June was more than 15 per cent lower than the record highs.”
“Cohen Landherr listed his Vancouver condo in June in order to upgrade. The 29-year-old financial technology consultant hopes to make a decent profit on his one-bedroom unit in the Mount Pleasant neighbourhood on Vancouver’s east side. His parents helped him in 2014 with a large down payment on the presale condo that he agreed to buy for $326,000. He wants to sell the 615-square-foot unit for close to his current list price of $599,800, marked down from his original asking price in June of $648,000. Mr. Landherr said he missed out on the pricing peak of Vancouver’s condo market in January.”
“Brandan Price, an agent with Rennie & Associates Realty Ltd., said provincial and federal housing measures have primarily affected higher-end detached houses so far in Vancouver. ‘For properties below $3-million, I’m not seeing sellers panic or buyers lose consumer confidence,’ Mr. Price said. ‘But many buyers and sellers aren’t seeing eye-to-eye. A lot of sellers are in a strong financial position and they don’t have to sell and they will just stay put until they get a number that they like.’”
The Vancouver Sun in Canada. “High inventory of detached homes in Vancouver’s west side and in West Vancouver means prices are coming down. ‘Declining prices for detached properties in some areas, particularly Vancouver’s Westside and West Vancouver, are due to high inventories that have accumulated due to sustained falling sales volumes,’ according to a CMHC statement.”
“The CMHC’s housing market assessment provides an analysis of Canada’s housing market in 15 census metropolitan areas based on four main factors: the rate at which sales outpace new listings, housing price acceleration, overvaluation and overbuilding. ‘At the national level a high degree of vulnerability continues due to moderate levels of price acceleration and overvaluation,’ said CMHC chief economist Bob Dugan.”
The New Zealand Herald. “Former PM John Key grabbed headlines at the weekend warning that New Zealand faces an economic downturn. Then this week we saw sentiment on the ANZ Business Outlook slump to levels not seen since the global financial crisis. We saw unemployment start heading in the wrong direction after five consecutive monthly falls. We saw QV data showing the national average house price fell. And we saw a major construction firm go into receivership leaving a number of half-finished projects.”
“Are we doing this? Are we having a downturn? And if so how serious will it actually be? From a business point of view, there are some worrying signs, ASB chief economist Nick Tuffley told The Economy Hub this week. ‘Throw in things like Mycoplasma bovis for the dairy sector and the background noise globally and you can see why people are saying: what’s going on here?’”
The New Daily on Australia. “The housing downturn has picked up speed, with property prices across the country recording their largest combined annual fall in six years. The downturn appears widespread, affecting both cities and regional areas. Values slipped in five of the eight capital cities in the past three months, while regional housing markets – ‘where conditions have generally been more resilient to falls’ – also ‘turned negative,’ CoreLogic said.”
“‘We can’t see any factors that may halt or reverse the housing markets trajectory of subtle declines over the second half of 2018,’ said CoreLogic research head Tim Lawless.”
The Daily Telegraph on Australia. “Sydney’s inner west, Hills district, Blacktown and Ryde region have lead the city’s housing market downturn, recording the biggest falls in prices. Prices in the Hills region recorded the biggest falls over the year at 9.2 per cent — although they remain well over $1.1 million on average. Inner west prices recorded the second biggest average fall at 8.8 per cent, followed by the Blacktown region’s 7.8 per cent fall and the 7.7 per cent fall in Ryde regional prices.”
“Prices were falling particularly hard in these regions due to an oversupply of housing, coupled with a drop in housing demand, according to Mr Lawless. ‘Most of these are areas where prices are on the higher end,’ he said. ‘They were also where prices grew the fastest over the boom so it’s possible the prices overshot the market.’”
“Properties valued within the top quarter of the market had average falls off nearly 8 per cent for the year. This compared to only a 1.8 per cent drop in prices for properties valued within the bottom quarter of the market. ‘Banks are looking closer at buyers’ income levels and it’s the point where most can’t get a loan for properties priced at the middle or higher end of the market,’ Mr Lawless said.”
The Australian Financial Review. “LJ Hooker’s Peter Tannous has his work cut out for him in Sydney’s west, where he is now either coaxing desperate homeowners to close the sale of their properties quickly before the market dips again or consoling those who have sold at a loss. As Corelogic’s Hedonic Home Value Index confirmed that property prices are continuing to drift down, this week Mr Tannous sold a two-bedroom unit for a 30-year-old homeowner who ‘couldn’t afford his mortgage’ any more with a newborn arriving.”
“The apartment on O’Neill Street in Guildford sold for $450,000 even though the owner wanted $489,000. He bought the home for nearly $483,000 at the peak of the market in 2015. ‘The royal commission has done the west no favours as banks tighten their lending criteria and focus more now than they ever did on serviceability,’ he said. ‘One lender won’t even take into account potential rent when considering a purchaser’s ability to service the mortgage. The broker said to the borrower “what if you can’t find a tenant’?”
“Unfortunately, Mr Tannous and his colleague, LJ Hooker Merrylands principal John Contos have plenty more similar properties to sell especially for their investor clients facing pressure from rising rental vacancy rates and falling rents in Sydney.”
“Capital Economics warns the ‘worst is yet to come’ and anticipates a faster decline in house prices than initially expected. ‘Our relatively bearish forecast that prices will gradually fall by 12 per cent from peak to trough is starting to look a bit optimistic,’ said Chief Australia & New Zealand Economist Paul Dales. ‘Most worrying is that prices will soon be falling at an even faster pace. The further decline in the number of home sales in March to a seven-year low was larger than the fall in the number of new listings. In other words, demand is deteriorating at a faster rate than supply is improving.’”