A report from the South China Morning Post. “Mainland Chinese mall landlords have moved to relieve the pressure on stores and restaurants brought on by the Wuhan coronavirus outbreak, by cutting rents and offering zero-rent periods. ‘The developers are answering the summons of the government. [The rent cuts] will not have a big impact on profits of these developers, as the time frame for the rent cut is relatively short,’ said Yang Hongxu, deputy head of E-house China R&D Institute. ‘The bigger impact is likely to be on cash flow, as people are unlikely to purchase houses in times when sales offices of property projects are prohibited from opening.’”
The Financial Express on India. “Wish Town was once a sought-after destination for India’s aspiring middle classes seeking a slice of the ‘good days’ promised by an ambitious Prime Minister Narendra Modi when he swept to power more than five years ago. Now, it’s a symbol of lost hope. A sprawling 1,063-acre property development located in Noida, just outside New Delhi, Wish Town was supposed to give would-be home buyers sparkling shopping malls, pristine golf courses and modern medical clinics. Apartments that should have been delivered by 2012 were billed in the media as ‘global homes with an Indian address.’”
“Today the area is dotted with unfinished apartment blocks, abandoned part way through construction. Dilapidated buildings stand vacant, with overgrown bushes instead of manicured lawns. Most of the streets are empty of cars and people, aside from a few security guards.”
“Home buyers like Manish Choudhary, a senior executive with an information technology company, remain bitter about their circumstances. ‘We can’t plan vacation and buy even normal stuff. I would have sent my child to a better school if the mortgage and rent wasn’t there,’ said Choudhary. ‘The slowdown has hit the class which is paying taxes.’”
From Standard Media on Kenya. “Mondays have turned into dreaded days for more reasons than just being the start of a work week. For anyone who owes a bank money for property they bought through a loan, and has started getting calls and emails about the pitfalls of default, this is the day they find out just how close their lender is to repossessing it. The number of properties going under the hammer has been on the rise, with auctioneers paying for up to six pages in the dailies to list what they have available for sale.”
“And this sale of distressed properties through auctions as banks try to recover the money advanced to struggling customers is expected to continue in the coming months. ‘Another cause for increased foreclosures is that the property market is gaining its real value as opposed to the overrated prices in the last decade or so, where properties were sold for more than double their real market values,’ said Linda Mokeira, a property consultant. ‘Any borrower who bought a property that was overpriced five years ago would rather default on repayments (maybe running for 15 to 20 years) than commit themselves to a lifetime on a property whose real value would be half, or even less, of the purchase price.’”
“An official with one of the leading mortgage providers said some of the banks had burned their fingers owing to careless decisions to lend, even in circumstances where it did not make business sense. ‘Foreclosure is the last resort for any lender, but looking at some of the properties and where they are located, we could say that some of those lending decisions were bad from the start. It was only logical that some of the contracts would end in foreclosure. The credit decision was flawed from the beginning. Theirs was bad lending decision and it was largely expected,’ said the official, who asked not to be named as he is not authorised to speak to the media.”
“The official added that the crisis in the property market was a self-correction of the ‘wanton escalation in property prices that we saw in the early 2000s. There is an oversupply, where most developers deemed there was demand. The yields, whether rental or capital gains, are coming down … it is just a mechanism where the market is correcting itself. In early 2000s, developers were making over 200 per cent returns on investment on their projects.’”
The Times of London on Scotland. “The ‘Boris Bounce’ hasn’t reached Scotland yet so you would be forgiven for feeling hopeless if your home has been on the market for a year and you are now considering a price cut. Lowering the price of your home should be seen as just another marketing strategy, and not a disaster, says Jamie Macnab from the estate agency Savills. ‘There is a stigma and a loss of faith in reducing the price, but sometimes you get to the point where that has to happen,’ he says.”
“There are some sellers who are so fixated on a price that they will instruct their estate agent to list their home at over home report value. They can be guaranteed that every interested party will query the price when they call for more details, and they will always, always be disappointed.”
From PA Now in Canada. “A new report from the Saskatoon and Region Home Builders’ Association (SRHBA) confirms 2019 was a much slower year for the construction industry. From 2018 to 2019, single family home permits in Prince Albert decreased from 85 down to 10. Looking as far back as 2014, there were 156 related permits issues in that year. Prince Albert Northcote NDP MLA Nicole Rancourt read the report and explained to paNOW the bigger picture is fewer permits means fewer people working.”
“‘I read a report here that 3,400 people in Saskatchewan that are unemployed in the industry and when we have people looking for work, potentially outside of our province and losing these trained individuals, that’s troubling,’ she said.”
The Sydney Morning Herald in Australia. “There’s more than just cheap credit at play here. In the second half of 2019, banks were also allowed to slash the internal interest rates that they use when checking how potential customers would cope if interest rates were to rise. And from this month, the government started guaranteeing a portion of 10,000 first-home buyer loans a year. The scheme allows people to take out a loan with a deposit of a little as 5 per cent, without paying the added cost of mortgage insurance.”
“Another house-price boom would encourage more building activity, creating jobs, and could improve consumer sentiment through a so-called ‘wealth effect.’ However, it could also create its own problems. Rising prices would clearly worsen the problem of housing affordability, and lead to people taking on even more debt. ANZ this month pointed out average loan sizes for first-home buyers have been pushed up to a record high of about $410,000.”
“Eliza Owen, CoreLogic’s head of residential research, says the first-home buyer guarantee scheme may ‘marginally boost’ demand from buyers, but it may only be bringing forward purchases that would have occurred anyway. ‘While there’s probably an element of FOMO at play, the first-home buyer cohort will probably decline as prices rise further in 2020,’ Owen says.”
From Domain News in Australia. “Property prices in some of Sydney’s most liveable suburbs have recorded six-figure price cuts, new data shows, with more than a dozen top suburbs now priced below the city-wide median. In Woollahra, ranked 12th out of 569 suburbs assessed for the liveability study, the median house price dropped a whopping $501,887 or 15.2 per cent to a median of $2.8 million.”
“Prices in Cremorne (ranked 28th) dropped about $486,000, the Cronulla (39) median fell about $477,000 and Paddington (15), Mosman (17) and Northbridge (24) all recorded drops of at least $228,000. Of the 100 most liveable suburbs, 11 had a median house price below the city-wide median of $1,142,212, recorded over the December quarter. Jannali, in 13th place, was the most liveable of the suburbs, and the fourth-most affordable with its median falling 2.6 per cent – or $25,426 – over the year to median of $952,500.”
“Sutherland (18) was the most affordable after its median fell 10.2 per cent – more than $100,000 – to $882,500. Engadine (51), Caringbah (98) and Gymea (64), were next – with the latter two also seeing substantial falls of almost $100,000 and $119,000. Warwick Farm saw the largest price drop of any Sydney suburb in 2019, with the median falling 20.2 per cent, or $94,925.”