Reduced To Being Investments For Speculators
The Daily Telegraph reports from Australia. “More than 3000 NSW residents have been caught rorting first-homebuyer concessions, leading to a record haul last year of $7.5 million in swindled stamp duty alone and some of the rorters even being jailed. Treasurer Eric Roozendaal made no apology for the tough approach. ‘This is an important program to help NSW families get into their first home and set them up for life,’ he said.”
The Age in Australia. “Commercial property rents will double and residential property prices will rise by up to 40 per cent during the next four to five years, a respected economist said yesterday in a bullish forecast for the Australian economy. BIS Shrapnel’s chief economist, Dr Frank Gelber dismissed the notion the housing market was suffering from a ‘bubble’ effect. ‘At the end of the day, we haven’t got a bubble in our residential market. We’re under-supplied not oversupplied. We need to build more, and we will. [House] prices will go up another 30 per cent over the next three years,’ he said.”
“Problems in Europe and America were unlikely to affect Australia’s economic outlook, he said. Almost 80 per cent of Australia’s exports go to Asia, Dr Gelber said. ‘We’re much more dependent on what happens in China.”’
The Wall Street Journal. “The construction boom in China has played a crucial role in global demand for raw materials, to the enormous benefit of resource exporters such as Australia, Brazil, Canada and much of Africa. The Chinese government this month reaffirmed its commitment to policies aimed at restraining high housing prices and property speculation. Ben Simpfendorfer, an economist at Royal Bank of Scotland, says China’s commodity consumption is likely to fall more sharply than overall economic growth.”
“‘It is heavy industry and commodities that are worst affected, as they benefited most from the earlier investment-led growth surge,’ he says. ‘The financial markets may not be recognising the risks of a sudden drop-off. They’re still not used to China’s outsized swings.’”
The China Post. “The Taipei County Government successfully sold yesterday all of the 12 commercial use land lots in the region. Competitive bidding from investors lifted the price to a record high level for land transactions in the county. In an earlier auction of land parcels for residential use in Xinzhuang on June 25, the price also set a new record.”
“Many realty market analysts said the land prices in the Greater Taipei area will continue the upward trend despite some measures taken by the Central Bank of China in an attempt to cool down speculation on the market. The limited supply of available land space in Taipei City and Taipei County prompts investors to outbid each other to get hold on the much-vaunted land parcels in anticipation of generous return on long-term investment by selling completed housing units at hugely inflated prices, they said.”
From China Daily. “Housing experts have suggested that Beijing impose a special tax on vacant homes, in order to lower the city’s vacancy rate and provide more houses to people who are in need. Between the Second and Third Ring Roads, for example, the rate of homes with electricity meters registering no use was around 20 percent. However, between the Fourth and Fifth Ring Roads, the rate rose to 30 percent, according to the survey. The survey did not include houses listed as being up for sale.”
“‘Houses should not be reduced to being investments for speculators. Their core function is to provide accommodation for people,’ said Wei Aiming, deputy to the People’s Congress of Beijing.”
“However, many multiple-home owners have expressed anger over Wei’s proposal. ‘The government should protect people’s interests if their properties are lawfully acquired,’ a man surnamed Yang said. He owns four apartments in Beijing, one for parents, one for him and his wife, and two that are vacant. ‘Those two apartments are a bit far from my office, so I choose to live in them during weekend, because they are closer to vacation spots,’ Yang said.”
“‘Compared with people in foreign countries who own their houses forever, we only own houses for 70 years. We have limited rights (on our apartments) already, why does the country want to take more? It’s not fair,’ said Yang.”
The Strait Times on Singapore. “Public resale flat prices have smashed records for the eighth straight quarter, rising 4.1 per cent in the second quarter of this year. The frenetic activity in the Housing Board (HDB) resale market shows no sign of letting up, with median COV also hitting a record of $30,000 for the second quarter - up 20 per cent from $25,000 in the previous quarter. COV refers to the cash upfront paid by a buyer over a flat’s valuation, and is often an indication of demand levels.”
“Analysts say the strength of prices have propped up the private property market, which saw prices rise 5.3 per cent in the second quarter compared to the first despite the slowdown in sales volume. In some estates such as Queenstown, for example, the median resale price for an executive was an eye-popping $781,500, while at Bishan, it was $685,500. For five-roomers, the median resale price was $682,500 for Marine Parade and $675,000 for Queenstown.”
“The percentage of resale transactions done above valuation increased to 96 per cent, up from 93 per cent in the previous quarter. Meanwhile, HDB said it has launched almost 9,000 new flats in the first half of the year - last year’s total supply - and will launch another 7,200 flats in the second half of the year to meet demand.”
The Ottawa Citizen in Canada. “Majed and Magdalena Turk recently bought their first home, just in time to welcome their son into their lives. It’s micro living with a spectacular view and exactly what they wanted. Unlike previous generations, the Turk’s family home doesn’t have a backyard for a swing set, a second bedroom or even a double garage for guy stuff. In fact, at just 664 square feet high above Laurier Avenue at Bank Street, you could say their entire home is the size of a garage. And they couldn’t be happier.”
“With condos ranging from 468 square feet to 1,500 square feet in the thoroughly modern condo, the Mondrian, and prices between $120,000 and $550,000, the Toronto-based developer says they’re inundated with young urbanites keen to buy into micro-sized living.”
“‘We’re not rich, we’re just managing. My friends are seeing how much we’re saving by not renting, so they’re buying in,’ says Majed. Furniture issues aside, Majed says there is one other benefit to micro-living. ‘It makes you bond. You can’t leave and pout when you have a disagreement.’”
The Vancouver Sun in Canada. “Metro Vancouver developers may have got ahead of themselves with the number of housing projects they are pushing into the pre-sale marketing phase, says a local market research firm. ‘It’s a big jump,’ Jeff Hancock, senior manager at MPC said in an interview. ‘I wouldn’t say [the 2010 number] is too many. I would say it will be interesting to see whether the market can absorb the number of units that have just come on [the market].’”
“Hancock said the number of units now in the marketing phase has the potential to put downward pressure on prices, depending on whether developers decide to proceed to construction. ‘I think a lot of developers were just ready to go and decided to test the market,’ Hancock said. ‘And if they don’t get the pre-sales they need, they’re okay with that and will just hold back.’”
The Telegraph on the UK. “The average asking price for a home in England and Wales fell by 0.6pc to £236,332 during the four weeks to July 10, according to property website Rightmove. The company said an average of 30,000 new homes were currently being put up for sale each week, 45pc more than during July last year. Miles Shipside of Rightmove said: ‘The number of new mortgages being approved each month is less than half the number of new sellers, with the imbalance being exacerbated by the increase of nearly 50pc in the number of properties coming to market compared to a year ago.’”
“‘More aggressive pricing is now the order of the day, which means that conditions are ripe for a strong buyers’ market in the second half of 2010. This is likely to see the average price gains of 7pc for the first half of the year wiped out by year-end,’ he said.”
The London Evening Standard. “Two Australians have taken to the streets wearing sandwich boards to sell their £600,000 Kensington flat. Nathan Baws, 36, and Thor Portus, 33, decided to cut out the mortgage brokers and advisers and offer a straight deal to buyers. They want a £50,000 deposit to secure the flat, with the remainder to be cleared by £950 weekly instalments, and hope their novel approach will attract more attention than an estate agent could at a time when the housing market is struggling.”
“They are following the example set last year by unemployed graduate David Rowe, who used a sandwich board to advertise himself for work. Mr Baws said: ‘I think you’ve got to do stuff like that just to get yourself out there. English people are normally fairly conservative compared with Australians. We do whatever it takes, even if it means humiliating ourselves.’”
“The flat, in DeVere Gardens, is in a mansion block with a porter. It has two large double bedrooms and a new kitchen and bathroom. Mr Baws said: ‘We figured if we came up with a payment structure, it would make it easier for someone to buy without needing a mortgage. The phone hasn’t stopped ringing. We haven’t sold it yet but hopefully we will soon.’”
The Irish Examiner. “More than 1,800 properties were repossessed in the North in the last year, it was revealed today. The number of people ordered to surrender their keys after defaulting on mortgage payments emerged after figures showed that more than 80,000 householders and almost 19,000 business owners failed to pay their rates in 2009/10.”
“John Wilkinson, chief executive of LPS said: ‘These are challenging times for both businesses and individuals across Northern Ireland. Nevertheless, with anticipated reductions in public expenditure, the income generated through rate collection will become even more important. The fact remains, however, that there are a number of people who have the ability to pay but who refuse to.’”
“Rorting.” I like that word. Visceral and sounds like something rotten. Shame we have no equivalent. We certainly have plenty of occasion to use the word here in the States.
Reminds me of “rutting” which is the season when antlered animals go somewhat crazy.
It reminded me of the word “rooting,” which in Australia has nothing to do with cheering for a sports team.
Looking at the prediction from Mr. Gelber, I feel comfortable in calling a top for the country, even though I haven’t visited for over ten years, because the prediction is the Down Under equivalent to that ridiculous 2005 forecast by the Miami real estate agent that used to be quoted here almost weekly. And once China slows down, Australia is going to have the worst depression in its history.
And one more thing, for those in the mood for irony: this is the country where black swans are native. Taleb would have a field day.
Sounds like “snorting” and “rotten” amalgamated. How pleasant. Wiki says it’s scamming by government types.
“Rorting” is what the Jetson’s dog does when he plays the stock market.
“With condos ranging from 468 square feet to 1,500 square feet in the thoroughly modern condo, the Mondrian, and prices between $120,000 and $550,000, the Toronto-based developer says they’re inundated with young urbanites keen to buy into micro-sized living.”
The phrase “young ubranites keen to buy into micro-sized living” made me smile. Thank you Ben! Realtor/Developer Speak often reminds me of NYC Art-House Speak. Turning crap into gold with words. Who says alchemy is dead? Oh and by the way, yes, I am a art-house freak myself. Just not one of the fake it ’til you make it ones.
Give me your poor huddled masses yearning to live small.
This article reminded me of one on a 300 sf place in Seattle, IIRC, back in the day:
‘Finding furnishings that suit the space is a challenge they share with neighbours. “There’s a garbage room in this building and every week it’s filled with furniture that people move in with, then can’t fit into their homes,” he says. “Some of it is very new. They’ve bought it thinking it would work, but in the end, it goes out to the curb.”
I don’t know if I understand this one:
‘To take advantage of the high ceilings, they also chose a tall cafe-style kitchen table.’
i understand it. it’s one of those tables that stands about elbow high that you see in fast-food cafes. no chairs, just the table.
That way, you don’t need to take up space with stools and other incidental furnishings. you take your food from the stove to the table and stand there to consume it. if you decide you need stools, they will slide under the table and completely clear the floorspace.
Then there are the beautifully-appointed common areas — a lounge, media room, gym, multipurpose room and landscaped outdoor barbecue area.
OMG they have a DOG too in that tiny place.
The commons areas may help somewhat - especially with the BBQ and gym. Would the “lounge” become a BYOB public house? I wonder how that “media room” works out. Can you imaging arguments between a dozen families about which show to watch on the telly?
The newest apartment building in my area is like this too. Tiny apartments. No room for furniture. Lots of common spaces. It seems to be for people who have no need at all for privacy, spending most of their time in public spaces. I guess it could work if you had no bulky possessions at all. All books in the e-reader. All music on the laptop. Other entertainment through netflix, hulu, etc. Flat screen TV. While this might work for an adult, I don’t see how you raise a child that way. Even a few stuffed toys, trucks and blocks would overwhelm that sort of space. Kids need to interact with stuff that exists in the real world.
While the size is a bit on the small side this is very common for Europe where the average apartment is around 1200 sft max. I know a of a family of 6 living in a 3 bedroom place!
BTW it was to see someone who enjoys apartment living, while my wife and I can afford it I have zero interest in a backyard
Uh, Europe is a big and very diverse place, care to be a bit more specific?
I live in Los Angeles but come from Sweden, even my student flat in Sweden was palatial compared to most dwellings I can afford here, and a fraction of the cost.
You also can’t compare square-foot to square-foot. My house here is the same square-footage as my dads place in Sweden, on paper, in real life it is only about half the size. In Sweden they don’t count most of the utility space into the square footage.
Of course you are paying up to 99% of your income in taxes.Under Obamacare we’ll only pay 65%.
This was common where i grew up a bedroom was for Sleeping and not much else.
Where you did the much else was in the basement the back yard or the screened in summer/storm windows in winter porch…
I know a of a family of 6 living in a 3 bedroom place!
Our family of four grew up in a Chicago bungalow, 940 square feet. Living room, dining room. kitchen, one bath, two bedrooms, that’s it. Never felt disadvantaged for a moment.
Of course we did have a full basement, but with a smelly oil furnace taking up a quarter of it, and basement floods three or four times a year, you’d be hard pressed to call that living space.
They’re trying to sell everyone on “New York-style” living. Developers do it everywhere because god knows that New York is the end all be all of existence, and if every city and town were just like New York, we’d all be sophisticated, green, educated, cultured people. Oh yeah, and it’s really profitable to sell a 300 sq ft. place for $600K. You can’t transplant a style of housing that sprung up naturally into places where it won’t work. These micro-lofts and so forth are the future tenements of the 21st century.
People in Europe do have smaller houses/apartments but there are also places in Europe where you can go to be outside the house that are free or low cost. In the US, you can’t go hang out in a public plaza and not be arrested for vagrancy.
Several years ago I read a hilariously cynical piece on some newer New York City condominium buildings. The author referred to the developer’s sales brochure as “smiley airhead literature.”
Found it!
http://www.vanityfair.com/culture/features/2006/10/gill200610
hold on. as long as i can remember you all have been moaning about people living in 4000 sq ft mcmansions. How it was inefficient. How it was destroying the environment. How all those people were foolish for living out in the burbs and dealing with long commutes.
Now people are buying small condos in the city. No commute. No wasted space. $500 heating bills turned into $50 heating bills.
And still you’re not happy.
Big house = no good.
Small condo = no good.
just exactly where are people supposed to live to get the HBB seal of approval? A tent?
Eddie:
Anyone who buys at $80 US (or the equivalent in CDN or AUS) per square foot would get my seal of approval.
I agree. My house is 800sf with a 300sf upstairs that I rent out. The real estate agent called it a ’starter’ home; I told her it was my ‘ender’ home. But fortunately it’s held its value through this meltdown, as the homes in the $350-$850 range are sitting 300+ days on the market. The smaller homes are being snapped up in days and have held or even appreciated in value. You have newcomers that want to get into the market, and the empty-nesters that realize how silly it was to build a huge home with the cost and headache to upkeep it.
And you can’t beat the $41 electric and $5 gas bills over the summer.
‘At the end of the day, we haven’t got a bubble in our residential market. We’re under-supplied not oversupplied. We need to build more, and we will. [House] prices will go up another 30 per cent over the next three years,’ he said.”
How can an economist even look himself in the mirror when he says something like that? The price increases are going to happen because of under supply but he also expects a huge amount of building over the next several years? Let us assume - just for the sake of argument - that there is a current under supply. Is there not some small chance that the new construction will increase supply so there is no shortage? Doesn’t that mean that prices will go down from where they are now in a time of under supply?
There are ways to justify an increase in prices, like a massive increase in demand for your country’s exports causing a general increase in wages or something. But to say it is purely due to under supply while there is plenty of building going on to try to meet the demand is nuts.
“The price increases are going to happen because of under supply but he also expects a huge amount of building over the next several years?”
That one jumped out at me, too, as singularly preposterous.
“How can an economist even look himself in the mirror when he says something like that?”
I’m guessing he is the Australian version of economists who work for REIC organizations (e.g. the NAR) — that is, he is a prostitute who will say whatever his employer requires in exchange for remuneration.
What a group of idiots. Young urbanites in 650 square foot con-doms, in Ottawa no less. Let’s see. Canada,3.8 million square miles in size. Con-dom in Ottawa 650 square feet. Hurry and buy, we’re running out of land.
Ottawa could be a bad investment choice long-range. If Quebec goes its own way, Ottawa won’t have much reason for existing anymore and could become the Detroit of the north.
Quebec isn’t going anywhere. They have it good in Canada and they know it. They threaten to separate, the rest of Canada says, ” what do you want now,” and Ottawa promptly gives it to them. They have been winning this game since the 1960’s. Ottawa is the coldest national capitol on earth, which makes it an even better investment for urbanites.
Well you might like to read RCAF Col. Ron Coleman’s book “Free At Last - Quebec 2007″. After a plebiscite for Quebec independence, the US intervenes “to prevent bloodshed”.
George Bush grabs the rest of Canada while the getting’s good.
That would be a lot smarter than the rest of Bush’s military misadventures.
It’s 2010, what happened, did I miss something. Obama says he likes Canada. Anyway why would the U.S. want 8 million bad tempered, whining, arrogant french speakers on top of the millions of spanish speakers you’ve already got.
Coleman wrote the book in 2004. Bush grabbed the “rest of Canada” leaving Quebec a small isolated impoverished independent country with a high fence around it. Oh yeah and the northern part of Quebec - rich with hydro power and only given to Quebec recently as a “bribe” to stay in the federation - gets taken back from what becomes “rump Quebec”. Quite the book, eh?
Sarkosy would come to the rescue of Quebec. Why would the U.S. want 26 million left leaning socialists demanding free health care and cradle to grave entitlements. Wait a minute, we might fit in to the new Amarika.
Do we get the Molson breweries ? I say attack now !
I have always thought that Canada could break apart or simply be seized by the United States. In the former case, it might not be Quebec; it could be the western provinces splitting away. If Canada splits, that will make American regional separatism more attractive.
Just in general, we have not seen any significant political consequences arise out of housing bubbles or the economic situation, unless you count Iceland or the tea party movement. In that respect, the efforts of central banks not only temporarily preserved insolvent private banks, but temporarily preserved the political status quo.
During the 1995 referendum, Quebec’s separatists had a vision of separatism that included keeping the $CAD and keeping Canadian passports for its new “citizens”.
Ottawa isn’t going anywhere since Quebec isn’t going anywhere. They have quasi independence as it is. Quebec runs its own pension system independent of the Canadian Pension Plan. They have a quasi-immigration policy outside of Canada’s. For example an immigrant to Quebec whose native language isn’t English must send their kids to a French school. And of course Bill 101 which mandates among other things store fronts have to be in French. And of the 9 supreme court justices in Canada, 3 are mandated to be French, even though the population of Quebec is less than 1/3 of the total population of Canada.
Over the past 40 or so years, the PM of the country has been from Quebec for about 30 of them, both Conservative and Liberal.
Quebec loves to play the victim, but in reality it gets everything it wants. And the rest of the country, due partly to PC pressure and partly because they’ve been brainwashed into believing the victim mentality, plays right along.
Con-doms for conned dummies. 20 years from now these dolts will look back in their lives and cry about how foolish they were financially when they were young.
Is it safe to assume that all the great financial advice former Goldman Sachs CEO provided to China a few years ago is paying off in buckets now for Chinese real estate investors?
“The fact remains, however, that there are a number of people who have the ability to pay but who refuse to.”
Strategic defaulting makes its way across the Pond into merry old Ireland. Hooyah! Wait ’till this avalanche gains steam throughout the world, and wipes out most fiat currencies.
‘[House] prices will go up another 30 per cent over the next three years,’
Did Gary Watts change his name to Dr Frank Gelber and move to Oz?
“Housing experts have suggested that Beijing impose a special tax on vacant homes, in order to lower the city’s vacancy rate and provide more houses to people who are in need.”
I wonder if that would work in California cities?
Sometimes the numbers forget to tell you that the sun will rise and life will move forward. Even though the numbers may indicate that the market has not bottomed, someone will buy a home and are glad they did.
What the numbers don’t forget to tell us is that this country still has way too many real estate developers, homebuilders, mortgage brokers and realtors, along with federal and state governments desperately propping them all up.
“Everyone should buy,
then we all could try,
Subdivision HELL”
mikey
‘the sun will rise and life will move forward…someone will buy a home and are glad they did’
and tomorrow is another day…
Vivian Liegh
Tomorrow Tomorrow….damn its still 85 and humid in the beeg apple…