A report from the Wall Street Journal. “China’s home-price growth slowed to an 18-month low in January, but it looks set to fall a lot further as Beijing’s long-running attempts to rein in the property market meet with effects from the coronavirus outbreak. It didn’t begin to affect consumer behavior until after authorities ordered Wuhan’s shutdown on Jan. 23. Since then, home sales in China likely plunged by nearly 90% compared with a year earlier, according to Centaline, as property developers closed sales centers across the country. ‘There will certainly be a nationwide large-scale price reduction in February,’ said Zhang Dawei, a Beijing-based analyst for Centaline.”
“One of China’s largest developers, China Evergrande Group, late Sunday began promoting discounts online, slashing prices by 25% for all residential properties, starting Tuesday through the end of the month. For March, the discount will be 22%.”
From Market Watch. “Zhu Min decided to put her three-bedroom apartment on the market two months ago. She had inherited the aging first-floor unit from her grandparents and felt it was time to trade it in for a newer, higher-floor unit, away from the noise and exhaust of bustling Chengdu, one of China’s biggest and fastest-growing cities. Then the coronavirus hit. ‘It’s been like a desert,’ she said. ‘Nobody has come since the outbreak.’”
The Bangkok Post in Thailand. “Competition in the condo market will escalate as a large supply booked by Chinese buyers will return to the market, says MAI-listed developer Chewathai Plc. Around 20 new condo projects with thousands of units are scheduled to be completed this year. Many of these projects had Chinese buyers making up as high as 49% of the units, said Boon Choon Kiat, Chewathai’s managing director.”
“‘Due to the Covid-19 outbreak, Chinese buyers who booked a unit at an off-plan project a few years ago won’t be able to travel to Thailand to receive the unit transfer once construction is complete,’ he said.”
“The outbreak affects many small businesses in China, causing unemployment. This may concern some Chinese buyers, causing them to refuse transfers later this year, said Mr Boon. He said these dumped units will be a further blow to developers as a glut already exists unsold in this market. ‘Small developers like us will face more difficulties this year as we have to fight a price war with bigger players who are likely to release a huge supply of unsold condos refused by Chinese buyers. They will turn to the same target as us — domestic buyers,’ said Mr Boon.”
“Economy of scale gives big companies an advantage in marketing campaigns as they have a lot of projects on hand, he said. However, when Chinese buyers refuse transfers, their down payments will be seized by developers, giving them a budget to offer discounts to new customers, said Mr Boon. He expects the situation to worsen considering the domestic economic outlook. A number of Thai buyers have had their mortgage applications rejected. Some Thais may also refuse unit transfers because of the slowing economy, said Mr Boon.”
The Globe and Mail in Canada. “Vancouver’s high-end house values took a major tumble last year, with the number of houses valued in the $3-million-and-over range dropping by almost a third. Research by Simon Fraser City Program director Andy Yan shows that 4,397 Vancouver houses priced at $3-million or more in 2018 had by 2019 fallen below that mark – a 28-per-cent drop. As well, the number of buyers who paid the foreign-buyers tax in key areas of Metro Vancouver had fallen so low that the numbers were not reportable by municipality.”
“Mr. Yan has seen a steep downhill direction on payment of the foreign-buyers tax since the province introduced the tax in 2016. ‘There seems to be a sea change in Metro Vancouver where a torrent of foreign buyers has become a dribble,’ Mr. Yan says. ‘The most dramatic changes were in West Vancouver, where, for 10 out of 12 months, the foreign buyers were below the reportable threshold.’”
“Realtor Clara Hartree says buyers of West Vancouver houses are refusing to pay the millions they were willing to pay three years ago. It means homeowners are less inclined to sell and downsize. ‘The [buyers] get properties at huge discounts and they have been using the lower assessed values to negotiate,’ she says.”
“When asked to comment on Mr. Yan’s analysis, provincial Minister of Finance Carole James responded with a statement by e-mail: ‘For too long our housing market was left to spiral out of control, creating a real estate market where money launderers and speculators flourished, and families fell behind. Increasing the foreign-buyers tax rate from 15 to 20 per cent and expanding it to areas beyond Greater Vancouver is helping to moderate B.C.’s housing market and is just one part of our 30-point housing plan.’”
“Developer Michael Geller completed his Ambleside Mews complex in West Vancouver a year ago, but still has three of the four units unsold, largely, he says, because downsizers can’t sell their houses at the prices they want. ‘There’s no doubt that we are witnessing a number of market downturns, especially in West Vancouver and Westside Vancouver. I still have three of the four homes to sell at Ambleside Mews, in large part because although potential buyers repeatedly tell the real estate agent they love the homes, they can’t sell their houses at the prices they want.’”