The Housing Bubble

The Guardian reports on Norway. “The collapse in the oil price has hit Norway’s economy. Around 50% of Norway’s export income comes from oil, which accounts for 20% of investment. The effect on Stavanger, Norway’s fourth largest city, has been pronounced. One in three jobs, around 43,000, are directly or indirectly related to oil and gas in the area. Thousands of jobs have already been lost, and house prices are sliding – only 16 properties were sold in the city this summer, according to a housing market survey by Samfunnsøkonomisk Analyse.”

“Norway’s investment in oil and gas will decline by more than 30% over the next two years, according to Øystein Dørum, chief economist at DNB Markets, a financial services group. ‘This will provide a skewed hit to the Norwegian economy – we expect to see a much weaker development in labour and housing markets in western Norway, particularly in Stavanger. But we do not predict a decline in the economy overall,’ Dørum said.”

Bloomberg on Australia. “A home-building frenzy that is shoring up Australia’s economy as the mining boom ends may also be what finally takes the steam out of one of the world’s most expensive property markets. The case in point: Green Square. Nearly 10,000 apartments will be built in one of Sydney’s newest suburbs in the next four years to satisfy investor demand. ‘There is a tsunami of home supply coming,’ said Nigel Stapledon, head of real estate research at the University of New South Wales Business School. ‘The market is going to be tested in accepting this sort of supply. It’s not like there is economic growth to support it. Income growth has gone from boom time to the lowest in a number of years and population growth has eased back.’”

Domain in Australia. “Property prices in parts of Sydney are starting to fall after unprecedented intervention by regulators and a wave of spring listings flooding the market. Experts say a market previously driven by buyers not wanting to miss out has been turned on its head: it’s now driven by sellers not wanting to miss out on the peak of the market. ‘We’re getting a quite extraordinary number of listings, significantly higher than we’ve had at this time of year before,’ says Dr Andrew Wilson, senior economist of the Domain Group.”

The Daily Telegraph in Australia. “They’re in their mid-20s and earn average incomes, yet Emily Sharp and Luke Rogers own 22 homes — 19 purchased in the last year alone. The Sydney couple’s $3 million property portfolio includes homes in Sydney, the Blue Mountains, Central Coast and Queensland, which they’ve purchased mostly over the past 12 months despite one of the biggest price booms in history. Ms Sharp, 25, and Mr Rogers, 24, purchased their homes with no financial help from friends or family and have relied instead on a clever home buying strategy and savings from their salaries — she works a graduate position in marketing, he works in the army.”

“The tactics they’ve used to purchase nine times as many homes in a year as the average Aussie will own in a lifetime may seem complicated, but anyone can do the same, Mr Rogers said. ‘The trick is to have equity in the home the day you purchase it. You then take out that equity to buy your next properties,’ he said.”

The Wall Street Journal on China. “China watchers were cheered this week when new economic data showing housing sales are continuing to rise. But those who watch the vital sector closely look at another statistic: sales of land by local government to property developers. Sluggish numbers there suggest the cheering may be premature. The volume of land sales nationwide fell 32.1% to 141.1 million square meters in the first eight months this year, according to the latest data issued by the National Bureau of Statistics. In August alone, land transaction volume was down 32% from a year earlier.”

“‘In August, many cities released land for sale, but it became local governments’ one-man show as many sites went unsold during auctions,’ said property consultancy China Real Estate Information Corp in a note.”

“Apart from high inventories, another factor holding developers back is the absence of a meaningful drop in land prices. In Huizhou, a third-tier city in southern China’s Guangdong province, at least four plots of residential land in the Huicheng district have failed to sell in three auctions in the past two years. Local officials kept the reserve prices for the four plots of land at a total of 316.5 million yuan during the last two auctions held last month and in December 2014.”

The Province in Canada. “Julia Lau rapidly climbed to the top in Vancouver real estate, tapping her deep pool of Mainland China buyers. Coming from Hong Kong, Lau started selling Vancouver homes in 2005. In 2008 she earned just under $400,000 in commissions. In 2009 she claimed $689,064 in annual income, putting her in the top one per cent of Metro Vancouver realtors. In the next few years, as investment from China surged, Lau’s sales reportedly accelerated to about 100 luxury homes per year.”

“In her Granville Street home she kept signifcant amounts of cash in a closet safe-vault standing between racks of designer jackets. But quietly in 2015, The Province has learned, Lau voluntarily forfeited her realtor’s licence — permanently — instead of going through a disciplinary hearing with the Real Estate Council of British Columbia. Of all cases examined by The Province, the most bizarre, detailed and complex is Lau’s failed challenge against Canada’s anti-money-laundering officials.”

“In early 2012 Lau told The Province she expected to sell about 10 luxury homes per month from January to May, which would be a slower pace of sales than she achieved in 2011. Lau said her clients were wealthy Chinese businessmen. ‘In Chinese culture we buy one home for living in and a few for investments,’ Lau said in 2012, adding the risk of rising interest rates was not a factor for her buyers. ‘Most of my clients buy in cash, so they don’t need the bank.’”