A Boom Town Is Seeing A Housing Market Reversal
A report from the Herald Scotland. “The stark impact of the plummeting oil price on the economy in the north east of Scotland has been revealed by new research showing soaring numbers claiming benefits and a drop in house sales and planning applications. But Faisal Choudhry, director of Scottish research at estate agent Savills, said that while the housing market in the north east was facing turbulent times, not everyone was losing out. ‘We must remember that this comes after seven years of phenomenal growth in house prices, so prices are still well above the Scottish average. We are beginning to see price reductions, but that opens up opportunities for people who may have been priced out of the market before.’ He added: ‘If you have job security, it is quite a good time to buy a home as the prices are being adjusted down the way in your favour.’”
The Week UK. “Once a boom town, Aberdeen, home to the companies and workers of the North Sea oil sector, is seeing a housing market reversal. After seven years of rapid growth – The Times notes that two years ago, the city was registering annual house price inflation of 14.4 per cent, nearly double the UK average – valuations for properties sold in the city fell 4.1 per cent through 2015, according to data from Hometrack. At £186,200, the average house in Aberdeen is now worth less than the nationwide average.”
“Hometrack’s Richard Donnell says Aberdeen could, if fears of an economic crash prove accurate, be a sign of the future for London, where prices rose 13 per cent last year. ‘This is an example of how housing markets are only as strong as their local economies. The bigger the industry for an area, the bigger the impact it’s going to be,’ he said. ‘You really need economic problems to get prices to fall. Aberdeen is a microcosm of what could happen in London if you had a big economic impact on the London economy, given how much prices have gone up.’”
From Bloomberg. “Home prices in the best areas of central London fell by the most since June 2009 in the six months through February as turmoil in financial markets and higher taxes deterred buyers. In Knightsbridge, home to the Harrods department store, values dropped by 7 percent in the 12 months through February, while there was a 3.3 percent fall in South Kensington and a 2 percent drop in Chelsea.”
“Vendors lowered asking prices on 39 percent of homes in central London since they were first offered for sale, according to data compiled by researcher Lonres in January. ‘A combination of higher levels of stamp duty and volatility in the financial markets means demand for prime central London property has been subdued in the first two months of 2016,’ Tom Bill, head of London residential research at Knight Frank, said in the report. ‘In particular, the start of the year has been overshadowed by fears surrounding the impotence of central banks.’”
The International Business Times. “There has been a spate of asking price slashes on luxury properties put up for re-sale in the Battersea Power Station development in south London’s Nine Elms area. The project, funded and developed by a Malaysian consortium, is mired in concerns about a potential oversupply of luxury new-build properties in prime London areas as overseas demand wanes due to a weakening global economy and tax hikes.”
“Propcision, a property-focused search engine, said its algorithm noted 89 price cuts to Battersea Power Station homes listed for re-sale since January 2016 alone. One four-bedroom town house first listed for re-sale in July 2015 for £6.5 million was cut on 12 February to £4m, a 38% reduction. Another one-bedroom flat was first listed in April 2015 at £800,000 and has been reduced four times since. Now the asking price is £600,000 as of 25 February.”
“‘The data is simply pointing to a downward direction,’ Michelle Ricci, co-founder of Propcision, told IBTimes UK. ‘Does it mean that these are now under market value? No, it doesn’t mean that just yet.’”
“Many of the Battersea Power Station properties were sold off-plan to Chinese investors who only had to lay down a relatively small deposit. The full balance is due when construction work is completed. But several reports suggest some early investors are walking away from their deposits because, seeing the slowdown in the prime London market and higher taxes, they no longer want to stump up the full amount and would rather cut their losses.”
“Ricci said this flurry of re-sale asking price cuts since the start of 2016 ‘definitely indicates that something is happening. These things [gather] momentum sometimes… One person starts slashing and another person gets nervous and thinks I’ve got to slash too. So it does have its own self-fulfilling prophecy which can get out of hand… We’ve seen people getting nervous, is how I would interpret it. People just needing to shift these properties. They probably put it on a bit high and now everything’s starting to tighten a bit more. They’ve got to loosen something and it’s going to be the pricing first.’”
The National Post. “You can find walking tours of historic ruins, mudlarking tours of the Thames, museum tours and outdoor-market tours. London has an endless variety of ways to gawp at its goods. Now, a new and unusual type has surfaced. Kleptocracy Tours of London (yep, that’s the name) tour streets where mansions are allegedly bought with ‘dirty money’ coming out of Russia, Ukraine and Kazakhstan. London has become home to the international uber-wealthy set, and not everyone is comfortable about where the funds for those mansions have come from.”
“‘More than 35,000 London properties have offshore owners, with no one knowing who they belong to or where the money came from,’ writes anti-corruption activist Roman Borisovich in the Guardian. Fully ten per cent of the homes in Westminster are said to have unknown ownership. Research has shown that not only do many of these homes sit empty, making housing unavailable in an already overburdened market, the prices paid for them have affected the higher-end real estate market in the city. The more the buyers pay, the more funds they can park.”
“The tour guides — prominent investigative journalists and money-laundering experts — explain during the bus tour how questionable money makes it way into the luxury London property market. They tell ticket-holders about the bankers, lawyers and agents who facilitate these purchases. ‘The ease with which this can be done,’ Borisovich says, ‘has turned many London properties into the reserve currency of international crime.’”
“Another one-bedroom flat was first listed in April 2015 at £800,000 and has been reduced four times since. Now the asking price is £600,000 as of 25 February.”
And that’s the cracking sound the ice makes right before you descend into the cold, dark water.
“Kleptocracy Tours of London (yep, that’s the name) tour streets where mansions are allegedly bought with ‘dirty money’ coming out of Russia, Ukraine and Kazakhstan.”
This has Max Keiser written all over it…
‘Latest figures reveal that a record half a million homes in England now have planning permission granted but have yet to be built. The length of time it takes for developers to complete a house has jumped from 24 to 32 weeks. Ministers are increasingly concerned by the failure of developers to speed up housebuilding and there are fears that some are deliberately restricting supply of new houses to boost profits.’
‘Taylor Wimpey announced a record operating profit margin of more than 20 per cent yesterday as it sold more homes at higher prices. Pre-tax profits at Britain’s biggest housebuilder Barratt Homes have also jumped 40 per cent in the past six months to nearly £300m.’
“When you have got housebuilders delivering, on average, 48 homes a year on some [large] sites that’s not good enough,” the housing minister, Brandon Lewis, said. “We know they can go further. Housebuilders will talk about saturating the market. But we are aware that in too many places we are still taking 20 weeks to build a house when we can do it in three or four.”
‘But Labour’s shadow housing minister, John Healey, said the Government could not escape the blame for the overall shortage of housing. “Ministers are right to be nervous about the performance of the private housebuilders,” he said. “For five years they’ve written developers one blank cheque after another, with little to show for it.”
“Cutting back planning rules has meant the number of affordable homes developers build has halved, and now extraordinary plans in the Housing Bill will let them dispense with building low-cost housing altogether and build starter homes on sale for up to £450,000 instead.”
taking 20 weeks to build a house when we can do it in three or four.” ??
LOL….Yeah right…
I’ve mentioned the general contrator who built a house in Flagstaff for $39/sq ft. He did it in 3 weeks. It was a huge custom house with a 3 car garage, one of which was big enough for an RV. He probably made $100k, $150k on it. I know he did it in 3 weeks because I had to visit the site to pay him regularly for other work he was overseeing at the same time.
Taylor Wimpey announced a record operating profit margin of more than 20 per cent yesterday as it sold more homes at higher prices.
I’ll gladly pay you Tuesday for a house today.
‘this flurry of re-sale asking price cuts since the start of 2016 ‘definitely indicates that something is happening.’
The super expensive market in Hong Kong, New York and London all going down at the same time. Maybe something is happening.
‘overshadowed by fears surrounding the impotence of central banks’
The recent G20 meeting was interesting. They certainly aren’t on the same page about money printing and interest rates. Some of them even said negative rates might be counter-productive.
‘the average house in Aberdeen is now worth less than the nationwide average’
One of these articles mentions Aberdeen had more millionaires per capita than London before the SHTF.
A “housing recovery” is falling prices to dramatically lower and more affordable levels by definition.
‘New home sales dropped 9.2% in January from December, with a whopping 32% plunge in sales in the Western part of the country, according to the U.S. Department of Housing and Urban Development. But the housing market remains in the process of a recovery, albeit a slow one, according to Mitch Roschelle, partner at PriceWaterhouseCoopers. He notes that existing home sales, the bulk of the market, were up 11% in January compared to the same time last year.’
‘Roschelle sees affordability as the reason behind the disconnection between the two. “New homes are about 20% to 30% more expensive than existing homes,” he said. “That’s why the [new home sales] numbers are falling.”
‘Some parts of the country are experiencing even larger price appreciations. In San Francisco’s booming housing market, many neighborhoods have seen home prices soar in the past year, and they are now regularly above $1 million, according to data from Trulia. Roschelle sees the run-up in Bay Area housing prices as the reason for the West’s steep decline in new homes sales.’
‘Roschelle remains positive on the housing market as a whole, despite affordability issues plaguing certain regions. Although many lament that millennials are not buying homes at the same rate as other generations, Roschelle sees that age group now dipping its toes into the housing market, joined by empty-nest Baby Boomers. He believes that will drive the market forward.’
“You’ve just got to be patient and look at the numbers over time,” he said. “We keep hitting new plateaus in terms of new home sales. So we’re going to get there. Don’t get overly freaked out by any one 24-hour news cycle story about housing, because the overwhelming thrust is improvement and recovery in housing,” he said.’
‘partner at PriceWaterhouseCoopers’
Might as well be an uber driver when it comes to house prices, Mitch.
‘We keep hitting new plateaus’
home prices fell 4% in my county ,but they are raising taxes 5% so gov workers can retire at 55 w DB pensions.
off shore/ seasonal owners are best
no kids in school
=less taxing
‘Oil prices surged to three-month highs on Monday, as improving sentiment in financial markets helped support prices and data revealed investors have dramatically upped their bets on the price of oil rising.’
‘Front-month Brent crude future traded as high as $39.50, the highest since early December.’
In 2015 there were two rallies in oil over $60/barrel, in the futures market. At no time did the glut in the physical market go away.
A globe full of excess crude and collapsing demand is here to stay.
I told u to buy. But no, u thought it was gonna crater. LMFAO
Az_Donk,
Why buy today what you can buy later for 65% less?
“In 2015 there were two rallies in oil over $60/barrel, in the futures market. At no time did the glut in the physical market go away.”
You’d guess that financiers rigging prices to go up would only result in artificially stimulating a production increase, exacerbating the physical glut.
Arcadia, CA Housing Market Implodes; Prices Crater 6% YoY As Demand Plunges To 30 Year Low Statewide
http://www.zillow.com/arcadia-ca/home-values/
I wouldn’t call a 6% price drop “cratering”.
Gnome Sane?
Cratering housing my friend. Cratering housing.
Seattle, WA Housing Prices Crater 5% YoY
http://www.zillow.com/seattle-wa-98199/home-values/
“China Is About To Unleash A Monster Housing Bubble, In Six Easy Steps”
http://www.zerohedge.com/news/2016-03-07/how-china-about-unleash-monster-housing-bubble-and-record-capital-outflows-six-easy-
Take a look at the six steps. Taken directly from the US housing play book.
Mortgage and appraisal fraud in all 4 directions.
“Realtor Charged With Threatening To Shoot Bank Employees In Trumbull”
http://trumbull.dailyvoice.com/police-fire/realtor-charged-with-threatening-to-shoot-bank-employees-in-trumbull/624401/
Not the first time Realtor Lou has unleashed his mental powers:
“Although Longwa admitted he was suspicious of the low price he nonetheless agreed to give “Blake” a down payment on the property of $2,500, police said.
The defendant failed to show up at a meeting with Longwa to close on the property and Longwa never heard from him again.”
http://www.ctpost.com/news/article/Man-charged-with-scamming-real-estate-agents-1007943.php
Speaking of Aberdeen…
Markets
Anti-Trump Voices Grow Louder In Scotland After Development Rift
Updated February 21, 2016 12:14 AM ET
Published February 17, 2016 5:15 AM ET
Leila Fadel
Morning Edition
Donald Trump played a round of golf after his Trump International Golf Links Course opened in July 2012 in Balmedie, Scotland, near Aberdeen.
Ian MacNicol/Getty Images
In northeast Scotland, there is a cluster of homes on the outskirts of a pristine golf course near Aberdeen owned by none other than Donald Trump. The U.S. presidential hopeful’s business venture promised thousands of jobs, tourism and a new way to diversify the oil economy.
Trump wanted to build the golf course in Scotland, he said, because his mother was born there. But almost a decade later, he has angered his neighbors and turned some of his former supporters against him.
“He promises the earth, delivers nothing,” says David Milne, who lives nearby. “As far as that goes, he’s in a good position to be a politician. But as far as the real world goes, no, do not trust this man with anything.”
Milne used to have an ocean view; now he has to stand on his upstairs balcony to see over the edge of Trump’s golf course.
“You’ve got the Donald Trump clubhouse maybe 700 yards away at a push, maybe slightly less,” he says.
The landscape might be a sprawl of green, but Milne says he rarely sees a golfer. He was never a fan of the golf course, which spreads across parts of 4,000-year-old coastal sand dunes designated as a special environmental site.
But that’s not why he dislikes Trump. It’s because he’s a bully, Milne says — and a really bad neighbor.
“They have threatened us at a few stages,” he says. “We’ve had the water lines cut, the power lines cut, the phone lines cut — sometimes accidentally, but not always. He has lied to us, he’s lied about us.”
…
“It’s because he’s a bully — and a really bad neighbor.”
If enough numbskulls are successfully brainwashed, America will have this man for our next President.