A report from the Times of London in the UK. “There are streets in London that may boast more expensive land. Others can claim to have higher average property prices. Yet none can compete when it comes to the sheer concentration of vast super-mansions. So why is The Bishops Avenue, aka Billionaires’ Row, falling into rack and ruin? The north London street is home to some of the world’s wealthiest people. Over the past few years, though, pockets of decay have set in where hulking homes have been neglected by overseas owners. Once they were palatial. Now, their windows are boarded while front lawns are strewn with beer cans and cigarette packets.”
“Some locals attest to worse. ‘These places have become a magnet for delinquents and wild animals,’ a woman, who gave her name as Mrs Walker, said. ‘Addicts, drunks, squatters, teenagers — you name it.’”
“At the south end of The Bishops Avenue, where the most expensive homes are to be found, The Times estimated that between a quarter and a third were unoccupied. Of those, all but one are owned by offshore companies registered in the Isle of Man, British Virgin Islands and the Bahamas. ‘Some of these rich foreigners have more money than sense,’ said one woman, who did not want to be named. ‘They’ve got so much money that they just buy the place and then forget all about it. It means nothing to them.’”
“Such stories contrast starkly with the national housing crisis. According to the charity, Action on Empty Homes, 85,000 families will spend Christmas this year living in temporary accommodation.”
The Irish Independent. “Representatives of some of the country’s most active housebuilders met for a regular catch-up to discuss industry issues earlier in the week and, according to people with knowledge of the meeting, they nearly all had one observation in common: a distinct slowdown in the length of time it is taking to sell the average family home around the country.”
“Many of the housebuilders present complained that the queues of buyers at new housing estates have disappeared and that newly-built units are still sitting idle long after they would have expected them to sell.”
From The Citizen in Kenya. “High-end property developers and owners continue to suffer burnt fingers as lenders intensify the recoveries of bad loans through the auction of collateral. A fresh report by Knight Frank paints the stakes for the high-end market owners who on one end continue to bare the impact of the oversupply linked price correction with buyers maintaining the control of the market. ‘The rising number of distressed properties in Nairobi has also affected prime residential values significantly with lenders intensifying efforts to recover non-performing loans through the sale of collateral,’ states part of the report.”
“Combined, the ongoing glut in the high-end properties segment coupled with the pressing need by lenders to recoup bad loans has led to the heavy discounting of property prices to see valuations in real estate remain on the slump. The market distress has recently featured on daily newspapers as auctioneers place multiple advertisements on mass-property sell-offs even as they too face hardships in making a sale prompting the initiation of substantive price slashes.”
The Ottawa Citizen in Canada. “In the immediate aftermath of Alberta’s accelerated coal phase-out, real-estate prices in Hanna, home to most of the 200 workers at the Sheerness power plant and coal mine, collapsed. The town has been forced to reassess the value of houses within its boundaries, dramatically reducing values and its tax base. But downward reassessments have not kept pace with the rate of decline in housing prices. Data from the town show that only one in 20 homes is selling above assessed value.”
“A fixer-upper can cost less than a used car. In early December, there were six houses for sale for less than $70,000, including a five-bedroom, three-bathroom, 1,300-square-foot split-level with a detached garage. The average price of houses on the market in Hanna is $166,215, which is just 44 per cent of the provincial average, according to Alberta Real Estate Association data.”
“‘When you can buy a truck or a house for the same price, it’s pretty sad,’ said Tracey Grantham, owner of Big Sky Real Estate Ltd. in Hanna. Many residents, she added, are still paying their mortgages even though they are losing equity seemingly by the day.”
From Domain News in Australia. “An inner-west deceased estate made its owners a $400,000 gain in just seven months, a staggering result that encapsulated the auction market’s turnaround this year. The inner-west bore the brunt of the downturn with median house prices declining more than 10 per cent year on year by July 2019, according to Domain data. But since then, Sydney house prices regained almost a third of the value lost during the two-year downturn, Domain’s September House Price Report found.”
“‘I can’t remember the last time I saw a first-home buyer beat an investor,’ said auctioneer Andrew Robinson . ‘I think compared to even six months ago – we were struggling … there just weren’t the buyers. It seems now that it’s easier to get money, the banks have loosened up their lending again, which has definitely helped.’”
The Australian Financial Review. “Sydney-based investor Scott O’Neill said most investors switching to commercial were chasing cash flow, which has been elusive in residential investments. ‘A lot of the residential markets are just not performing as well as they used to and there are a lot of mediocre returns out there,’ he said. ‘The days of 8 per cent capital growth in residential seemed long gone. Rents have dropped in many areas, vacancies have risen and some states are changing tenancy laws in favour of tenants, which make residential less attractive.’”
“Mr O’Neill noted that retiring Baby Boomers who rely on regular income have also turned to commercial investment to boost their cash flow. ‘Many people find it hard to rely on the rent they’re getting from residential properties,’ he said. ‘You can’t live off the rental income as prices are still very high relative to rent so most of the time, your residential investment is costing you money, rather than earning income.’”
From New Zealand City. “OneRoof data predicts the average Auckland house price could skyrocket threefold – to almost 3-million-dollars by 2040. Queenstown will likely remain as the most expensive area – with an average home at 4.8 million. OneRoof’s Owen Vaughan says if the next 20 years are anything like the last 20, it could be a wild ride.”
From Stuff New Zealand. “2019 in the New Zealand construction sector presents an interesting smorgasbord of wins and losses. The most obvious win is the continued growth of the construction sector – extending its multi-year boom. Arguably this is one of the longest ‘upswings’ in construction ever seen in New Zealand. In October we saw a projected further 9 per cent growth to $43 billion announced. This is an amazing run.”
“But construction industry ‘high performance’ is a paradoxical concept. The failure rate of construction companies is horrific. The fallout of Ebert’s failure in late 2018 fed forward into 2019 stressing companies. We have seen multiple liquidations including Arrow International, Stanley Group and others. Large clients lose money and have to rethink their development plans. Small clients building their dream home lose everything.”
“In 2019 housing will be largely remembered as the year of KiwiBuild ‘recalibration’. Phil Twyford was moved out as housing minister – in a move seen as a tacit acceptance of KiwiBuild programme failure. KiwiBuild has to one of the most over-egged confections to hit the sector in recent years. Sky high expectations were created, not matched by delivery. Everyone wants a high quality home opportunity for first time homeowners. However fundamentally they were the wrong price point product pitched at the wrong demographic.”
“Prior to the general election 2020, the Government needs to offset negative KiwiBuild PR. A quick win is needed to defuse attacks ahead of the election. Without it government risks accusations of an unhealthy attachment to an obviously dead bird.”