European Real Estate Deals Slump to Lowest Level in 13 Years
The deep freeze that’s gripped Europe’s real estate markets since borrowing costs jumped worsened at the start of the year as deals plunged to their lowest levels since 2011.
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The deep freeze that’s gripped Europe’s real estate markets since borrowing costs jumped worsened at the start of the year as deals plunged to their lowest levels since 2011.
Investors are looking for the next policy domino to fall in Asia amid an escalating campaign against a resurgent dollar, after Indonesia used a surprise interest rate hike to defend the rupiah.
Vietnamese billionaire Pham Nhat Vuong pledged to invest at least another $1 billion of his personal wealth into VinFast Auto Ltd., providing the capital needed for expansion of the struggling electric vehicle maker.
Macrotech Developers Ltd., a real estate firm that operates under the brand name Lodha, expects pre-sales to grow about 20% in the year to March after reporting its highest ever quarterly revenue.
Distressed Indonesian property developer PT Agung Podomoro Land has hired financial advisory firm Kroll Inc. to advise on an exchange of $132 million of bonds due in June, according to people familiar with the plan.
Mar 22, 2021
Bloomberg News
,A record share of Canadians expect home prices will continue hitting new highs, an exuberance that adds to concern the housing market is entering a speculative bubble.
Six in 10 Canadians believe the value of real estate in their neighborhood will increase over the next six months, according to the latest weekly survey by Nanos Research Group for Bloomberg News. It’s the first time such readings have surpassed 60 per cent since polling began in 2008, underscoring how the rally in home prices is beginning to feed expectations of future high returns.
The concern is these so-called extrapolative expectations will attract the wrong sort of demand -- from speculators or investors fearing they will miss out -- that will hyper-inflate the market, exacerbate inaffordability for young or low-income families, add to rising mortgage debt and amplify the risks of a destabilizing market crash.
“This fear of missing out is out there and it’s driving people to make decisions they’ll have to live with,” Robert Hogue, an economist at Royal Bank of Canada in Toronto, said by phone.
The poll result isn’t the only housing indicator that’s flashing red:
There are good underlying reasons for the rally. For one, mortgage interest rates dropped to all-time lows last year, making it a lot cheaper to carry all that debt. That’s why home ownership costs are only growing about 2.2 per cent annually -- which is in line with recent historical averages -- despite soaring housing values.
A shift to remote work during the pandemic has also led to increased demand for single-family homes, particularly in suburban areas and small towns. At the same time, inventory has been tight and that’s driving up prices.
But concerns are beginning to mount. Bank of Canada Governor Tiff Macklem cautioned last month there are some early signs of “excess exuberance.” Flippers, who buy with the intention of reselling quickly for major profit after minor improvements, are becoming more prominent. And stories abound of modest-sized homes being sold at exorbitant prices.
Canadians aren’t expecting it to stop. In the Nanos poll, the share of respondents who say the value of real estate will increase is up from a pandemic low of 9% last May.
Nor are there many signs government is going to step in to slow things down. The housing rally has been a key driver of new wealth and confidence at a time of great uncertainty, and policy makers will be wary of tampering. There is also a political constraint to action, with Prime Minister Justin Trudeau’s government weighing whether to trigger an election this year.
“At the minimum, I’d say they need to state they are concerned and are considering options to cool the market down,” Hogue said.