A billion Canadian dollars are being laundered in BC a year

British Columbia’s money laundering is an emergency. The public deserves an inquiry.

The entire thing is an emergency. Recently, a federal case — known as the E-Pirate investigation — related to money laundering in British Columbia resulted in stayed charges when the RCMP botched the case by exposing the identity of an informant. The investigation reads like something out of a crime novel. As investigative journalist Sam Cooper, perhaps the top journalist on this file, summarized it, “The E-Pirate investigation found loan sharks allegedly connected to drug-traffickers in China used legal and illegal Metro Vancouver casinos to wash drug cash, helping ultrawealthy high-rollers from China buy Vancouver real estate, and fund fentanyl imports into Canada.”

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Please. A wide-ranging, long-term commission is critical to exposing the truth and rooting out corruption in the province. And it’s well worth the money (as a member of the Charbonneau Commission has said) — it might even pay for itself in fines and funds saved through reforms. Moreover, findings from a commission, which can compel witnesses to appear before it and require them to testify under oath, can be used in prosecutions. Meanwhile, every day without an inquiry is an extra day for thugs and crooks to get away with illicit acts that harm citizens and residents of the province.

Secret police study finds crime networks could have laundered over $1B through Vancouver homes in 2016

The study of more than 1,200 luxury real estate purchases in B.C.’s Lower Mainland in 2016 found that more than 10 per cent were tied to buyers with criminal records. And 95 per cent of those transactions were believed by police intelligence to be linked to Chinese crime networks. The study findings, obtained by Global News, are a startling look at what police believe to be the massive money laundering occurring in the Vancouver-area real estate market.

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Richest Australian guy and developer warns that Australian banks must keep the party going, or else

Australia six weeks from a housing collapse, US report warns

It comes after Australia’s richest man, billionaire property developer Harry Triguboff, warned that a “very significant” number of Chinese buyers were now failing to settle their off-the-plan units and urgent action was needed.
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Earlier, broker CLSA predicted a looming apartment “crisis” that would be kicked off by a wave of defaults forcing smaller developers into receivership, pushing down prices and potentially causing wider contagion that could lead to a recession.
The ISSA described moves by Australian banks from July this year to restrict or even withdraw funding to foreign property investors as “almost cartel-like policies”.
“The policies, now in place by all major Australian banks, were instituted in anticipation of an economic downturn internationally and domestically, but which, in fact, actually trigger or exacerbate such a downturn,” the article said.

Nine students own $57M worth of Vancouver property

Nine students own $57M worth of Vancouver property

A total of $40-million worth of that property involved securing a mortgage.
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Fundamentally, Eby is concerned this lax lending approach by some Canadian banks may be contributing to real estate speculation and the rapid price increases we’ve seen in our real estate market in recent times.

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.

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.

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.

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.

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.

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.

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.

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.

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.

Australian Banks Hold Insufficient Capital

Fears Australian banks ill-prepared for housing-induced crisis

"Murray is suggesting, as others are, that you need enough capital to be able to deal with adverse situations without having to rely on the government. That's clear but what is not clear is the amount of capital, the length of time and the types of risks banks can continue to take on their balance sheets," he said.

APRA and other regulators have allowed some banks to use internal models to set risk levels, resulting in further downward revisions in the size of their assets and the amount of capital they hold. Because mortgages have historically had low levels of defaults banks have been allowed to hold only thin slivers of capital against large mortgage portfolios, making home loans very profitable.

Mr Brunton said AMP's white paper, which was published initially in November last year and updated recently to factor in the potential impact of the Murray inquiry, explored one bank and found that because of risk-weights it held just $4 billion of capital against $400 billion of mortgage loans – a leverage ratio of about 100 times.

Mortgage Debt Relative to Economy Size : Australia, Canada, U.S.

Australia
1.6 trillion (AUS) GDP
1.3 trillion (AUS) residential mortgage debt
81%

Canada
1.55 trillion (CAN) GDP
1.2 trillion (CAN) residential mortgage debt (http://www.statcan.gc.ca/tables-tableaux/sum-som/l01/cst01/fin21-eng.htm)
77%

U.S.A.
16 trillion (US) GDP
11 trillion (US) residential mortgage debt (http://www.federalreserve.gov/econresdata/releases/mortoutstand/current.htm)
69%

Russians buying in South Africa

Foreign purchases estimated at 4% of the market.
Russians boost South Africa's Luxury Real Estate

But after President Vladimir Putin began to tighten restrictions last year on the freedom of the Russian elite to move their capital, Russians may now be motivated to move their assets more permanently overseas.

“There is a sense that [Russian] people want to get their money out [of the country] because of Putin closing down the doors,” said Steward, of the Knight Frank property agency. “That could be a reason why they want to invest here. The Russian market has certainly found London, and I think Cape Town is now being discovered.”

Bubble update from China

China's property market represents 15% of GDP
China's money supply has increased 3x since 2008
July was the lowest for inflows in six years
China real estate: A bubble bursting?

"The exposure of China's banks (and now shadow banks) to real estate may look different than it did in the U.S., but it's very real. The main exposure is the reliance on property as collateral to support virtually all forms of lending throughout the economy, a situation that is very similar to Japan in the 1980s," he added, referring to a collapse in Japan's property market after a boom.

In recent weeks, mid-sized developers such as Hong-Kong listed Greentown China Holdings and Shui On Land issued profit warnings amid a downturn in the housing market.

France's house prices flat last quarter

Prices down 1.2% on a yearly value after a 1.9% drop the previous quarter. 0.0% for the country as a whole on the quarter vs. 0.5% fall for the Paris region. The fall was halted by stimulus measures, it seems. Has France’s property market turned a corner?

Faced with a newbuild shortfall and the failure of its "Target 500K" initiative to build half a million new houses every year to 2017, the government unveiled a slew of measures in early July to boost the sector. These include the simplification of construction rules and regulations as well as the extension of the "0 percent interest loan" to boost middle and low-income first-time buying.

RBA says high prices not a crisis

Australia's high house prices not a 'crisis', says RBA

Price growth in almost all capital cities in the three months to June has helped the median Australian house price soar almost 11 per cent in the past year.

But RBA board member John Edwards has tried to cool fears that the property market is becoming overheated, saying the rapid rise won't continue indefinitely.

The RBA has kept interest rates on hold. Australia's economy grew at its slowest pace in more than a year in the June quarter after a sharp fall in exports and weak business investment in the June quarter.