Shutdown Averted, McCarthy Faces Mutiny: Your Sunday US Briefing
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Australian home prices stayed strong in September, driven by soaring demand and outweighing the impact of the central bank’s aggressive policy tightening campaign.
China’s home sales moderated their decline in September, following stepped-up efforts from Beijing to support the housing sector.
The troubles facing highly indebted property developers in China have dominated conversations about the Asian nation’s economy and markets this year. Yet according to Rayliant Global Advisors’ Jason Hsu, there’s an important distinction between this and past housing crises elsewhere which is guiding policymakers’ response to it: The developers are the ones who are over-leveraged, not the households.
China’s property sector has yet to see the worst of the crisis that has cast a pall over the nation’s economy and helped drive an exodus of global funds from the world’s second-largest stock market.
Real estate analysts and economists alike continue to weigh in on the state of Canada’s housing market, which was recently described by one prominent Bay Street economist as one of the "biggest bubbles of all time".
Here’s what they told BNN Bloomberg this week:
“The thing about bubbles is that you don’t know it was a bubble until it bursts. So, right now, a lot of people are uncomfortable with home prices, that’s an understatement … You make supply-and-demand imbalances in communities that just didn’t have the inventory. Overall, trends are rising everywhere.”
“The government has failed in terms of managing and incentivizing supply in places where people want to buy. It’s hard to herd all the cats: you’ve got municipal, provincial, federal bodies that all need to be on the same page, that is not easy.”
- Rob McLister, mortgage editor, RATESDOTCA
“The condo market in the GTA does not show signs of a bubble and neither does the market for houses in the downtown core. But, the suburban housing market in the GTA is definitely a bubble. House prices in these regions are up 30 per cent plus over last year and 80 per cent of houses are selling for more than the owner's asking price. These trends are not normal.”
“The most important change they can make right now is to change the narrative. The first and most effective thing they can do is to stop telling Canadians there’s nothing to worry about when it comes to our housing market. Do tell us that our government is concerned about the rapid acceleration in prices and if the market doesn’t cool down naturally, it will introduce policies that aim to cool the market.”
- John Pasalis, president, Realosophy Realty
“Real estate markets are illiquid with prices driven by marginal buyers and sellers. We estimate that less than 3 per cent of real estate inventory transacts on the resale market annually ... Given strong marginal demand and weak marginal supply, real estate market momentum should continue in the near-term.”
“While policymakers tend to focus on supply as a means to address housing affordability, factors impacting demand also need to be addressed. Macroprudential measures to restrain demand could include changes to mortgage stress tests or minimum down payments. In our view, higher interest rates are likely the most effective means for reducing demand.”
- Nigel D'Souza, investment analyst, financial services, Veritas Investment Research
“The central bank lowering interest rates to the effective lower bound and enacting a QE program is certainly playing a role here, although I think there are other factors that we need to consider as well. The pandemic has caused some perverse adjustments in the way households are spending their money, they haven’t been able to spend on services ... So they’re looking for more space and they have the ability to do so because they were saving money in other areas ... That’s all going to come to an end as the economy normalizes.”
- Royce Mendes, senior economist, CIBC Capital Markets