The Housing Bubble

The Globe and Mail reports from Canada. “In northeastern British Columbia, concern is centred on low prices for steel-making metallurgical coal – the effects of which have already been devastating. Five metallurgical coal mines were shut down between the spring of 2013 and fall of 2014. The impact has been especially painful in Tumbler Ridge, where prices for single-family detached houses have plunged. In the first 10 months of this year, detached homes sold in the community averaged $128,333, down 47 per cent from $240,901 in the same period of 2013, according to the B.C. Real Estate Association.”

“After Tumbler Ridge Mayor Don McPherson took a walk down several streets, he noticed that four out of every 10 homes appeared vacant. He reckons the population has declined to roughly 2,000 residents from more than 3,300 in 2013. ‘Nobody wanted to move. It wasn’t their choice. They didn’t have any work,’ he said.”

NAIJA 247 News on Nigeria. “Strong indications emerged last week that the slowdown in Nigeria’s property market for four successive quarters (from Q4. 2014 –Q3.2015) may have begun to take its tolls on the value of assets held by banks for the various facilities granted different classes of borrowers. Managing Director, Asset Management Company of Nigeria (AMCON), Mr. Ahmed Kuru, who confirmed the development, explained that the slump in the real estate sector has seriously affected the value of banks’ assets, one of the reasons he advanced for the corporation’s resolve not to acquire non-performing loans of banks anymore. He said, ‘AMCON is not ready to acquire new loans again. If you do a proper analysis of assets banks are holding, you will be shocked.’”

“Reports have it that real estate pricing in key locations of Lagos slowed down by up to 22 per cent in some places. AMCON has no plans to offer Nigerian lenders another bailout following last year’s plunge in crude prices, according to Kuru. ‘If you say you will always intervene it will breed rascality in banks,’ Kuru said.”

The Gladstone Observer in Australia. “Locals have taken a swipe at property investors and experts after another doom and gloom outlook on the Gladstone market. Commenters voiced sympathy for families who had been pressured into buying during the boom around three years ago because rent became too high. Some stories emerged of these families, with one losing $150,000 in less than five years.”

“No such compassion went to investors and developers, who readers said got their just desserts. A few recalled that property experts including Terry Ryder, founder of hotspotting.com.au, had been heralding Gladstone as a place to buy just eight months before the downturn. There is one silver lining: readers pointed out that first-home buyers had a prime opportunity to enter the market now. Rhiannon Jenkins: ‘We came to Gladstone for a better future for our family 5 years ago our rent went from $380 to $620 in a year. We felt forced to buy a house for $435k spent 50k and now we are selling it for $335,000 so disappointing and such a strain on our family.’”

Stuff Business Day in New Zealand. “The Auckland housing market’s downturn is more severe than anticipated, an economist says. Writing in Westpac’s latest ‘Home Truths’ report, chief economist Dominick Stephens said the latest round of housing data had been revealing. ‘There can now be no doubting that the erstwhile star market has suffered a fall from grace. These are very weak numbers indeed, and confirm what the anecdotes have been screaming for the past three months – the Auckland housing market has slowed with a thump,’ Stephens said.”

Bloomberg on China. “A developer from one of China’s so-called ghost towns said it’s struggling to repay bonds that are coming due. Ordos City Huayan Investment Group Co., based in Ordos in the northern Inner Mongolia region, said uncertainty arose after bondholders opted for the early redemption of 1.14 billion yuan ($176.7 million) of notes on Dec. 17, according to a statement on the Chinabond website Friday. Erdos City Infrastructure Construction Investment Co., a local government financing vehicle at Ordos, provides a guarantee for the bonds, the Chinabond statement said.”

“Ordos City Huayan’s admission comes only four days after pig iron producer Sichuan Shengda Group Ltd. became at least the seventh Chinese company to renege on local debt obligations this year. ‘It’s uncertain if the guarantor can bail out Ordos City Huayan’s bond,’ said Zhang Chao, a bond analyst at China Investment Securities Co. in Shenzhen. ‘The LGFV itself is facing operation problems.’”

“The coal-mining city of Ordos, whose fortunes reversed as the commodity’s boom turned to bust, is grappling with a slumping Chinese property market that researcher SouFun Holdings Ltd. said has led to more than 10 ‘ghost towns.’”

The Malaysia Chronicle. “Malaysia’s property sector is expected to go through a ‘flat’ year next year while market prices will benefit those looking to buy or rent houses, industry experts predicted today. Siva Shanker, CEO of property agency PPC International, said there was no need to ‘panic’ or worry as the property market would typically go through a cycle of a few ‘bad’ years before recovering.”

“Siva said Malaysians who are looking to rent houses can expect cheaper prices next year, due to financially-squeezed property investors competing for extra income to repay their housing loans. ‘I think next year, we are going to see rental shooting straight down as they compete with each other to rent their properties out so at least they can get a little bit of income which they can use to subsidise their mortgages,’ he said, predicting that these property speculators will fight ‘tooth and nail’ to keep their properties and avoid defaulting on their loans.”