Monday, July 25, 2016

Australian lenders freezing lending to Asian buyers

Australian lenders freeze housing loans, triggers property funding crisis
The Australian Financial Review reports that Shanghai-based financiers have been complaining that funding of the Chinese clients from Australian banks were frozen. Their only recourse is to foreclose the property or borrow at usurious interest rates from private financiers.
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The move affected almost all his clients waiting for completion of properties in Australia which are mostly flats in the Melbourne commercial business districts, Yin says. Most of these apartments are sold off-the-plan in which purchasers buy the units on a pre-selling with a deposit and complete payments when the property is finished. But it needs a second valuation and lender’s financing commitment.

Brexit London house prices could fall 30%, high end properties 50%

Brexit could cut London house prices by more than 30%, says bank
Société Générale added: “We see a classic housing bubble in London and Brexit as the trigger for the correction … Given the current ratio of prices to incomes in London, a price correction of even 40-50% in the most expensive London boroughs does not seem impossible.”
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London property prices have more than doubled since they began to recover from the financial crisis in 2009. Last month, the average London house price was £472,000 – 12 times average London earnings, compared with a long-term average of six times, Société Générale said.

Thursday, July 14, 2016

Leak reveals secret tax crackdown on foreign-money real estate deals in Vancouver

Leak reveals secret tax crackdown on foreign-money real estate deals in Vancouver
But the employee feared the sweep would prove inadequate. “Sure, they’ve upped the numbers because it’s hitting the papers,” they said. But on average, they estimated, each redeployed income auditor would only be able to conduct 10 to 12 audits per year – about 500 or 600 in total. “This is nothing,” compared to the likely scale of the cheating, they said.
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Census data from 2011 has previously shown that 25,000 households in the City of Vancouver spent more on their housing costs than their entire declared income, with these representing 9.5 per cent of all households.
But far from being impoverished, such households were concentrated in some of the city’s most expensive neighbourhoods, where homes sell for multi-million-dollar prices.

Wednesday, February 24, 2016

Suing yourself to get around Chinese currency export controls

Chinese millionaire sues himself through an offshore shell company to beat currency export controls
But there's a better way: for a small sum, you can just set up an offshore shell company, direct it to sue a Chinese company you own, throw the lawsuit, and then, oh well, I guess there's nothing for it but to send a bunch of cash to your shell company, exempted from export controls, in the form of court-ordered damages.

Wednesday, February 10, 2016

Mailing in the keys in non-recourse Alberta

Jingle mail rears its ugly head in Alberta again Why is this ugly? The banks entered willing into a contract that said, hey you don't feel like paying that mortgage, fine, we'll take the house in lieu of further payment. This is the way it is supposed to work. The banks (presumably, one hopes) have much better information than the consumer. If the handful of large banks' army of accountants and actuaries can't do their jobs and assess risk properly, then that isn't the fault of the consumer.
If you walk away, you lose your home, but otherwise have no personal liability. Elsewhere in Canada, your lender can take you to court and seize other assets, such as RRSPs, vehicles, and even garnishee your wages.
You know what really destroys an economy where employment is driven by services? Killing consumer spending. What a great idea in the teeth of a downturn.

Tuesday, January 19, 2016

How Australian households the most indebted in the world

How Australian households became the most indebted in the world
One of the faults of real estate analysis is the failure to distinctly define an asset bubble, so debate on the matter is kept necessarily vague. Only a couple of housing market metrics is needed to identify a bubble, and are now considered commonplace: nominal price to inflation, price to income and price to rent. On all three, Australia is both historically and internationally at or near the top.

Since the advent of the GFC, it has become commonly accepted that the global real estate booms originated from rapidly expanding bank credit or private mortgage debt. It is not merely the growth of mortgage debt (the first derivative) but the acceleration (the second derivative), also known as the change in the rate of growth. Nevertheless, the simple growth of mortgage debt provides a strong indicator for housing price growth.

Tuesday, June 16, 2015

Dubai suffers 6.1% decline year on year

Dubai: Where house prices are falling fastest in the Middle East
Between March 2014 and March 2015, prices in Dubai registered a 6.1 decline, higher than the price falls recorded in other major property markets like France, Singapore, Italy or Spain, according to the Knight Frank Global House Price Index, which tracks the performance of major residential markets across the world. Out of the 56 markets monitored by Knight Frank, only 14 locations registered price declines. The worst performing is Ukraine, showing a 15.5 percent drop in rates, followed by Cyprus, where values fell by 8.2 percent and China, falling by 6.4 percent.

Friday, May 8, 2015

Australia to use fines and jail time to address illegal foreign purchases

Sydney property prices are rising 5x faster than wages. Government finally takes notice. Australia to tackle high housing prices with fines, jail for illegal foreign home purchases
Sentences may stretch to three years and fines to A$637,500 ($607,000) for illicit buyers, with penalties also on third parties knowingly complicit in violations, Prime Minister Tony Abbott said Saturday in Sydney. The steps are needed to give the public confidence that foreign-investment rules on property purchases are being enforced, he said.

Sunday, March 29, 2015

The Dollar Debt Shell Game

Feeling green
Yet there are still two reasons to worry. First, the outlook for China is a puzzle. The country holds $1.2 trillion in Treasury bills, many of which are sitting in its sovereign-wealth fund. When the dollar rises, the fund gets richer. But even in a dollar-rich country, there can be pockets of pain. China’s firms have built up a nasty currency mismatch. Almost 25% of corporate debt is dollar-denominated, but only 8.5% of corporate earnings are. Worse, this debt is concentrated, according to Morgan Stanley, with 5% of firms holding 50% of it.

Chinese property developers are the most obviously vulnerable. Companies like Evergrande, China Vanke and Wanda build and sell offices and houses, so most of their earnings are in yuan. Banned from borrowing directly from banks, they have been active issuers of dollar bonds. They have also borrowed from trust companies, according to Fitch, a rating agency. The trusts are themselves highly leveraged and have borrowed dollars via subsidiaries in Hong Kong. This arrangement will amplify the economic pain if property prices in China continue to decline, as they have been doing for several months.
When the post mortem on this next cycle is done, it will look a lot more like one long cycle than it does now.

Thursday, January 22, 2015

French house prices down 1.5% for 2014

House prices fell in most regions in France in 2014
Picardy led the way with price rises of 3.5%, Lower Normandy saw prices rise by 1.2%, Poitou-Charentes by 1%, Languedoc-Roussillon by 0.9%, Auvergne by 0.8% and Brittany by 0.4%. Elsewhere prices fell, most notably by 5.3% in Nord pas de Calais, by 5.1% in Limousin, by 4.9% in Upper Normandy, by 4.8% in Franche Comte, and by 4.3% in Champagne Ardennes.
Century 21’s annual review put the average fall in property prices at 2.8%. The data shows only one region with rising prices, Limousin with growth of 3.7%. Everywhere else show falling prices, most notably a decline of 7.4% in Languedoc Roussillon, a fall of 7% in Lorraine and 6.7% in Poitou Charentes.