Reality And Desperation Are Going To Kick In
Bloomberg reports on the UK. “Buying upscale homes in the U.K. through trust funds and overseas-based companies is popular among the rich as a way to minimize taxes and protect privacy. The practice also makes it difficult for law enforcement and the courts to establish whether their owners bought them legitimately. Hundreds of billions of pounds classified as the proceeds of crime are laundered here every year and London’s surging property market is one of the more attractive ways to do it, according to the U.K. National Crime Agency.”
“More than 12,500 London properties worth over 48.5 billion pounds were sold by offshore companies from 2012 through 2014, Land Registry data compiled for Bloomberg News show. More than a third of the sellers were out of the British Virgin Islands. One of the biggest obstacles in tracing proceeds of crime is that law enforcement receive few reports of suspicious customer activities that are related to real estate, and those they get aren’t always useful, according to Transparency International. Just 179 of the 354,186 reports filed in the year ending in September came from property brokers.”
“‘For an individual estate agency, regular business with any high-net-worth individual can be very lucrative for the company and, therefore, there can be a lack of incentive to report of suspicions,’ said Nick Maxwell, head of research at Transparency International. ‘A similar risk arises in small practices in the legal and accountancy sector.’”
From Channel NewsAsia. “It is the height of the property selling season in Australia and the market is running hot - producing sky-high prices which many local first-time buyers cannot afford. Some are blaming the influx of foreign investors for the rise in property values, particularly the Chinese. The federal government in Canberra is now planning a crackdown on international buyers who purchase real estate illegally, forcing them to sell the property and pay back 25 per cent of the value to the government. In addition, it will be more expensive for foreigners to apply to purchase the homes that they are allowed to buy.”
“The property boom is affecting both the high-end and low-end markets, with some harbour-side homes selling for tens of millions, while properties in the cheaper suburbs are fetching sums beyond their owners’ wildest dreams. Real estate agent Catherine Murphy has never seen the market so hot: ‘I sold my own house at the end of 2013 because I thought that was the best market I’d ever seen, but this is even better than that.’”
The Sydney Morning Herald in Australia. “Sydney’s median house price went from $765,493 in the September quarter of 2013, to $872,811 in the December quarter of 2014. Fuelling demand is expectations of lower cash rates. Financial markets are now pricing in a 56 per cent chance of the Reserve Bank of Australia trimming the official cash rate from 2.25 per cent to a new record of 2 per cent on Tuesday. Roger Montgomery, of Montgomery Investment Management noted that eventually ‘the price of those assets [stocks and property] will be pushed way too high,’ he said. ‘After that, a large number of investors will, sadly, suffer financially again – from buying too late and paying too much.’”
The Malaysian Insider. “At a property fair in the SACC mall, shoppers’ faces were grim as they milled around the miniature displays of houses, each with a price tag ranging from around RM300,000 to RM1.4 million. ‘It’s unreasonable,’ said Roslan Mat Sarji, as he studied the glossy pamphlets. ‘I’m helping my son look for a house, but the ones on offer here are all out of our range. Who can actually afford to buy a house in the city in this day and age?’”
“The couple’s sentiments were a common theme at the fair yesterday, which saw a steady stream of shoppers approach the smiling salesmen for more information on the houses on sale, only to balk at the prices mentioned. It was apparent from the fair yesterday that Malaysians still needed homes to own and live in – they were just unable to afford them. ‘Many come and ask about the properties, but the moment we mention the prices of the houses on offer, their faces change and they say they will just wait and see,’ one PKNS salesmen who declined to be named told The Malaysian Insider.”
Barron’s on Brazil. “High inventories and economic pressure in Brazil’s housing will hurt builders even more, according to Citi Research, which downgraded three players to sell. Citi analysts write: ‘Consumer confidence remains low, with large uncertainties preventing buyers from engaging in big-ticket purchases, such as new homes. To top it off, most important cities in Brazil are currently oversupplied, forcing companies to decelerate new launches aggressively and concede discounts in order to reduce their inventory levels. Among the highly-leveraged peer group of PDG, Tecnisa and Rossi, we believe sales cancellations should continue, reducing cash inflows, limiting the degree of debt amortizations and forcing companies to renegotiate part of its corporate debt.’”
Albawaba on Dubai. “Declining currencies in European countries whose citizens are among the leading buyers of Dubai homes are combining with falling oil prices and a tax on foreign property held by Indians to push down home prices in the emirate. Liam Jeffrey was surprised when a couple selling an apartment on Dubai’s Palm Jumeirah artificial island asked the property broker to cut the price by 10 percent just three weeks after they put it on the market. ‘They found a property they wanted to buy in London and when they send the money back to the U.K., they make up that difference on the exchange rate alone,’ said the 26-year-old broker at Smith & Ken.”
“Jeffrey said today’s market is a change from dealing with stubborn sellers who overestimated the value of their properties. The Palm Jumeirah home he’s trying to sell hasn’t found a buyer since the owners asked him to cut the price. ‘Investors are worried that prices will fall and are simply holding off on purchases until they see which way the wind blows,’ he said.”
CTV News Calgary. “New housing numbers released by the Calgary Real Estate Board suggest housing market is down. The number of home sales in Calgary have fallen and listings have doubled which means prices are also on the way down. John Andrews is a real estate expert from Queen’s University and he says a lot of people are listing their homes out of fear, but says they may have already missed out on getting the price they hoped. ‘They’re going to hold on for a few months at that price and then reality is going to kick in, and in some cases a bit of desperation,’ said Andrews.”
“‘The vulnerabilities in China today are very similar to the vulnerabilities in Japan,’ said Roy Smith, 76, who was a Goldman Sachs Group Inc. partner when he wrote a column saying Japan’s rise as a financial hegemon was done. ‘Nobody agrees with me. But they didn’t agree with me in 1990, so at least I have one right.’”
“Among the risks: bad loans, overpriced stocks and a frothy property market are flashing danger for China’s economy and putting pressure on a fragile financial system — similar to conditions that triggered Japan’s fall, said Smith, a finance professor at New York University’s Stern School of Business. A further parallel is the burden of an aging population, with mounting pension and health-care costs, he says.”
“In 2014, the economy expanded at the slowest full-year pace in almost a quarter century. The slowdown has thrown a spotlight on a mounting debt pile that includes souring loans to local government financing vehicles, or LGFVs, which funded a boom in construction. Doubts about the creditworthiness of LGFV debt deepened last year, when Premier Li Keqiang started to pare back implicit guarantees for the regional financing units.”
“‘The Chinese financial structure is very fragile because a lot of it is misreported and will reveal a great deal of weakness when it comes out,’ said Smith, who specializes in international banking and finance. ‘They say a rising tide lifts all boats — a falling tide reveals all the rocks and slime. There was a lot of it in Japan that people did not expect to see.’”
‘After two hours trawling through positions at a employment market in Zhejiang province, east China’s economic powerhouse, Liu Jiajia left without applying for any of the jobs offered. “I am looking for a monthly salary of about 3,000 yuan (US$480), but the wages are around 2,000 yuan (US$320),” she said.’
‘Liu, from China’s most populous province of Henan, returned to her hometown after the Lunar New Year holiday, as she is concerned that job opportunities might be scarce.’
‘The Hangzhou Human Resources Market is one of the largest employment markets along the country’s coastal regions. Last year, the event attracted 866 employers offering 19,202 jobs. However, the market reflected the larger trend in the manufacturing industry, which is bearing the brunt of downward pressure.’
‘Lin Xiaopeng, another job seeker at the job fair, also from Henan, voiced the same gripes as Liu. “There are not many manufacturing positions, most vacancies were in the service sector, such as salesmen and cashiers,” Lin said.’
‘As the world’s second-largest economy experienced its lowest growth rate in 24 years in 2014, industries, understandably, have been trying to cut costs. Although data on Wednesday showed the HSBC flash manufacturing purchasing mangers index (PMI) had improved slightly in February, rising to a four month high of 50.1, the bank cautioned that domestic economic activity would likely remain sluggish and external demand was uncertain.’
‘Most enterprises maintained a gloomy outlook amid rising costs and declining prices. According to a survey conducted by the Guangdong Province Department of Commerce at the end of last year, only 20% of enterprises in the Pearl River Delta, one of the major manufacturing bases in China, expected their annual orders to rise, while 40% expected a decline, and 40% expected no change at all.’
“HONG KONG — Lawmakers in much of the world are often accused of being in the pockets of billionaires. But there’s a difference in China. Here, the lawmakers are the billionaires.
Among the 1,271 richest Chinese people tracked by the Shanghai-based Hurun Report, a record 203, or more than one in seven, are delegates to the nation’s Parliament or its advisory body, which will convene for their yearly joint session this week in Beijing. According to figures released by the Hurun Report on Monday, the delegates’ combined net worth is $463.8 billion, more than the annual economic output of Austria.”
http://www.nytimes.com/2015/03/03/world/asia/in-chinas-legislature-the-rich-are-more-than-represented.html?ref=asia
No need for wasteful lobbying if the billionaires themselves make up the parliament.
This differs from the US how?
We have screeching tree monkey billionaire puppets in office.
What would Mao say about this? I’m guessing those individuals would be shot. It does surprise me that China’s leaders aren’t foreseeing the obvious long-term problems with ideological legitimacy, although American leaders have the same blind spot.
“I am looking for a monthly salary of about 3,000 yuan (US$480), but the wages are around 2,000 yuan (US$320),” she said.’
Hmmmm … why do I think Chinese consumers won’t be able to pick up the slack for falling exports?
Maybe it’s because the cost of living there is about what it is here, so that monthly salary could pay the rent (outside the city), or it could pay for your food, but probably not both.
Fang nu.
http://www.numbeo.com/cost-of-living/country_result.jsp?country=China&displayCurrency=USD
“The federal government in Canberra is now planning a crackdown on international buyers who purchase real estate illegally”
Day late, dollar short. Horse leaves barn, etc, etc.
I’m calling BS on that “crackdown” right now. I bet Australian developers and realtors who contribute to the political campaigns of Australian politicians already are objecting.
‘Chinese authorities have recently launched a crack down on “zombie enterprises,” businesses which have terminated operations but continue to exist and occupy land, reports our Chinese-language sister paper Want Daily.’
‘Local officials often allow the companies to continue to exist and keep their landholdings in the hope that they can be revived when the economy rebounds.’
‘The majority of the enterprises are located in the Yangtze River Delta and the Pearl River Delta. There are 1,542 such companies in Zhejiang province alone, which occupy 25,700 acres of land without any substantial production, according official figures.’
‘A provincial court dealt with 78.5 billion yuan (US$12.5 billion) in non-performing assets owned by these companies, cleared 11,800 acres of seized lands and more than 6 million square meters of office and factory space.’
Too bad the article didn’t say how much creditors are owed. My hunch is that these phony companies were kept on life support by financial injections from local governments, none of which will be repaid. And the local governments probably raised that money by selling land to developers, and borrowing from shadow banks. Now the land is worthless, and the banks can kiss that money goodbye.
‘China’s love affair with coal has come to an abrupt end, with figures released last week showing that consumption fell in 2014 for the first time in 14 years. A combination of slowing industrial growth and a drive by the government in Beijing finally to take emissions and pollution seriously are the main drivers for the slump in the coal market.’
‘As China accounts for half the world’s demand for “seaborne” coal, and was assumed to be the main driver for new pits for decades to come, now could be the right time for investors to review their exposure to the commodity.’
‘It will also reawaken debate among policymakers about the wider global financial risks that may emerge from a so-called “carbon bubble”, whereby fossil fuel deposits become “stranded”, leaving investors and pension fund holders sitting on massive losses.’
‘The figures will have a profound impact on the world’s biggest coal mining companies, which are already scaling back operations at a near-record rate. The biggest impact so far has been felt in Australia. Export prices for Australian thermal coal used in power stations fell by 25pc last year and hit a new low of $57 per tonne in January. At these levels, producers are being forced to dramatically cut back on investments and in some cases close coalmines.’
“Chinese thermal coal peaking is like changing the direction on an escalator. It will be a shock for those who assumed the direction would always be up,” said James Leaton, research director at Carbon Tracker Initiative.’
Gotta hand it to those Chinese, shutting down the powerhouse to save the planet.
From what I have heard from our colleagues in Beijing the situation there has become nightmarish.
Please do tell.
I assume he’s talking about the pollution. It does suck.
I assume he’s talking about the pollution. It does suck.
This. I have yet to have the pleasure of visiting our Beijing campus, but my understanding is that the air pollution is mind boggling. It makes Denver’s worst brown cloud day look like a nature preserve.
http://www.theguardian.com/cities/2014/dec/16/beijing-airpocalypse-city-almost-uninhabitable-pollution-china
Yeah, you can’t really compare it to anything in modern day America. On a bad day think about standing at the bottom of a skyscraper and not being able to see the top. Part of the problem is that the big cities are on the east coast and everything from the interior blows right through them on the way out to sea.
On a clear day after a few days of rain (on these days the comparison to Denver is appropriate) you can see blue sky and *everybody* walks around gaping at the sky and taking pictures of it like yokels looking at skyscrapers.
Look at the photos from the Beijing Marathon last year.
I only can presume that further economic growth will make the city, and the country, commensurately more polluted. If any country tries to revive the settlement-colonialism model of 1500-1900 it might be China, simply because the physical landscape there is becoming unfit for humans.
A place like Angola might be “New Hunan” or “New Guangdong” come 2075.
I think you misspelled Vancouver. Or maybe you meant San Francisco?
“China is a big country, inhabited by many Chinese.”
‘House values across Perth fell by more than 2 per cent through February despite the cut in mortgage interest rates. The fall came despite the Reserve Bank slicing official interest rates to their lowest level on record. Banks cut their mortgage rates in line with the Reserve.’
‘Nationally, prices edged up by a modest 0.3 per cent but almost all of the growth was in Sydney where house values lifted by 1.6 per cent. Over the past year, Sydney values have climbed by 14.7 per cent.’
‘RP’s head of research Tim Lawless said outside of Sydney, lower interest rates were failing to drive up values. “We might not see the lower interest rate environment stimulate the housing market as much as it has in the past,” he said. “Weaker jobs growth, higher unemployment, declining affordability, low rental yields and political uncertainty are all factors that could dent consumer confidence and provide some counter balance to the rate cuts and quell any additional market exuberance.”
“‘The Chinese financial structure is very fragile because a lot of it is misreported and will reveal a great deal of weakness when it comes out,’ said Smith, who specializes in international banking and finance. ‘They say a rising tide lifts all boats — a falling tide reveals all the rocks and slime. There was a lot of it in Japan that people did not expect to see.’”
A receding tsunami tide washes all the naked swimmers out to sea.
‘Local housing prices could drop by as much as 20 pct this year. That’s according to the head of the Macau General Association of Real Estate. Triggered, says Chong Sio Kin, by the slowdown in the gaming industry.’
“Comparing the gross gaming revenue in January this year with that of December 2014, despite the decrease having narrowed, it’s just a matter of numbers,” the newspaper quoted Mr. Chong as saying. “In the short term, I don’t see any factors benefiting [the gaming industry and the property market] appearing.”
‘Since June last year, Macau gross gaming revenue has dropped for eight consecutive months. In 2014, the annual casino revenue even posted a historic decrease of 2.6 per cent year-on-year.’
‘Meanwhile, the number of housing transactions in 2014 slumped by 36 per cent year-on-year, amounting to only 7,218 transactions compared to the 11,306 transactions of 2013, despite the fact that housing prices had increased by 21 per cent year-on-year, costing MOP100,156 (US$12,519) per square metre.’
‘Nevertheless, Mr. Chong said housing prices have actually decreased by 10 per cent recently, claiming purchasers now have more room to bargain for cheaper prices.
In addition to residential flats, he indicated that the prices of shops, offices and industrial buildings was also decreasing’
“The continuous drop in gross gaming revenue has affected the market at a certain level. Meanwhile, the 24-hour border crossing policy and the [possible] implementation of allowing Macau vehicles with single plate numbers to enter Hengqin has amazed Macau residents in housing there,” he told the news outlet.
“Of course, there are no problems if [people] buy [the flats] for self-use. However, if [they purchase] for investment, [they] should consider it cautiously,” he claimed.’
It’s unclear if gambling is down because of Chinese crackdown on capital flight or because of negative growth on the mainland.
At what point did gambling reinvent itself as an industry rather than a vice?
Check your privilege, everything is an industry now. The porn industry, hamburger manufacturing, and tweeting are all important economic activities in an advanced super power economy like ours.
LOL. +1 on that comment.
“The
pornadult entertainment industry,hamburger manufacturingground beef processing, andtweetinginstant messaging…”Fixed it fer ya.
With housing prices resuming their path to a new low, just how low will they go?
http://picpaste.com/pics/56b0bfc3360db56e5a50c4a6a6bde756.1425390282.jpg
Begin Phase 2.
http://www.oftwominds.com/blog-photos/bubble-decline2.gif
That’s what I’m talking about right there.
Yes, except that every homeowner and his dog recently refi’d into low-rate loans. It seems like the inventory explosion has been postponed until harsh life reality compels Grandpa Sixpack and his wife to relocate to Pleasant Gardens Assisted Living Apartments. Meanwhile, they are staying put as long as possible, as they cannot afford the increase in mortgage payments which would result if they relocated.
It’s not the interest rate, it’s the price. Underwater has nothing to do with interest rates. Most people will not just hang in there making payments on their Golden Goose gone foul. Divorce, untimely death or even injury & etc. force transactions.
Except that when interest rates go up, it will be the interest rate, as prices will go down and underwater peops will get closer to the bottom of the sea.
Which is yet another reason I don’t expect rates to ever go up again…
Link fixt.
http://goo.gl/wRrcM4
It doubles as CraterRage® Photo Of The Year
Bothell, WA Sale Prices Dive 4% YoY As Price Declines Appear Nationally
http://www.zillow.com/bothell-wa/home-values/
“‘The vulnerabilities in China today are very similar to the vulnerabilities in Japan,’ said Roy Smith, 76, who was a Goldman Sachs Group Inc. partner when he wrote a column saying Japan’s rise as a financial hegemon was done. ‘Nobody agrees with me. But they didn’t agree with me in 1990, so at least I have one right.’
Here is why I think no one agrees with him at GS. At the top for Japan, its wage levels had reached the level of the U.S. Meanwhile, China was taking off with wages less than 10 cents an hour. The exporting economy of Japan had to compete with a competitor that had wages that were less than 1% of its wages in many industries. Add to that, China was an actual an exporter of coal and oil and other raw materials. It had cheap energy to Japan’s expensive imported energy.
China is facing no such challenge. India has wages 1/2 to 1/3 of China but very poor infrastructure and a poorly educated population. It is already importing raw materials. It is not the challenge to China that China was to Japan. How, the Japanese managed to save as much of its exporting economy is the real surprise.
“Here is why I think no one agrees with him at GS.”
Why is it whatsoever relevant whether anyone at GS agrees with him? Folks who call turning points most often are lone voices, as herd animals prefer company to correctness.
Then just address the point China is not at the same point as Japan was and does not face similar competition in the future.
Do you think that competition from China is the critical factor for where Japan is right now? I have thought of Japan’s situation as more based on a bubble and selling stuff like cars to us. Which are both independent of China so far.
Do you think that competition from China is the critical factor for where Japan is right now?
Yes and it is an ongoing problem:
http://www.japantimes.co.jp/news/2015/02/11/business/japanese-manufacturers-face-stiff-competition-from-china-in-u-s-rail-car-market/
“The key difference I see between China now and Japan in 1990 is that China is at a much lower stage of development,” said Louis Kuijs, chief China economist at Royal Bank of Scotland Group Plc in Hong Kong, who previously worked at the World Bank.’
Denver, CO Housing Inventory Billows 73% As Prices Slip
http://www.movoto.com/denver-co/market-trends/
can’t be Zillow has denver going up 5% +
double plus good
I like Colorado ,but don’t quite get the appeal of Denver
There’s a whole lot of craterin’ going on in CO.
Black Forest, CO Sale Prices Plunge 20%
http://www.zillow.com/black-forest-co/home-values/
Colorado great in general - Denver just bad - the only reason to be there is a job and me thinks that this is questionable too - esp. with the decline in oil and attendant economies attached to said oil.
There are probably more oil drilling related jobs in Greeley than in Denver.
I have heard, from a native of Greeley, that the nearby cattle feedlot creates a very foul smell when the wind blows in a certain direction.
Every time a storm comes from the east you can even smell it in Boulder.
Yorba Linda, CA Sale Prices Crack 16% YoY; Price Declines Spread
http://www.zillow.com/yorba-linda-ca/home-values/
“It is the height of the property selling season in Australia and the market is running hot - producing sky-high prices which many local first-time buyers cannot afford. Some are blaming the influx of foreign investors for the rise in property values, particularly the Chinese. The federal government in Canberra is now planning a crackdown on international buyers who purchase real estate illegally, forcing them to sell the property and pay back 25 per cent of the value to the government. In addition, it will be more expensive for foreigners to apply to purchase the homes that they are allowed to buy.”
Is there any chance for a similar crackdown on international criminals whose investing activities drive up the price of California real estate?
The paper glut runneth over:
‘The U.S. has so much crude that it is running out of places to put it, and that could drive oil and gasoline prices even lower in the coming months. For the past seven weeks, the United States has been producing and importing an average of 1 million more barrels of oil every day than it is consuming.’
‘Hillary Stevenson, who manages storage, pipeline and refinery monitoring for Genscape, says Cushing could be full by mid-April. Supplies are increasing at “the highest rate we have ever seen at Cushing,” she says.’
http://finance.yahoo.com/news/us-running-room-store-oil-171025359.html
Crude oil is storage is up and products are down, why is the MSM just focusing on crude oil? Second question, why is the price of Brent up by more than 15 dollars in a month if the crude build in the U.S. not directly tied to the refinery strike and not to a real glut?
Additionally, if you look at the December 2015 prices in the U.S., they are ten dollars a barrel higher than today. You can store oil for a few bucks, it is very rational to store oil:
http://futures.tradingcharts.com/marketquotes/CL.html
It is amazing that you equate finished product storage with crude storage facilities. Do you think you can send crude oil to jet fuel storage tanks and have no problems? It like adding the capacity of sewers to drinking water storage, meaningless.
“Second question, why is the price of Brent up by more than 15 dollars in a month if the crude build in the U.S. not directly tied to the refinery strike and not to a real glut?”
Could it be due to cotango traders hoarding the surplus on land and at sea?
Not to suggest this is sustainable…
car fest is ending
Mr Banker will have to offer 120 month loans
84 not enough
The only good time to buy a car is when they are practically giving them away. That would NOT be now.
That would be the last two times we bought one (2008 and January 2012).
And the next…
2008 was a little late. Late 2006 into 2007 Detroit was liquidating bigtime.
Let the price of cars fall. Some of us oldsters will need a “retirement vehicle”, especially those of us who cannot afford a house.
Some people on my (not very big) block in Las Vegas must have gotten unpleasant news lately.
Two dumpsters appeared overnight and a van parked outside a foreclosure disappeared. Others are early with their spring cleaning; a lot of garage sales going on in the surrounding neighborhood.