Thursday, September 15, 2016

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.
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.
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.

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.
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.”
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.
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.