Cross-posted from The Conversation: The inequalities and inequities that housing markets generate have become a cross-national issue in the last decade or so. In Australia, the UK and the US, discussions of “Generation Rent” have taken centre stage. In the generational debate, older, asset-wealthy owner-occupiers advantaged by previously more stable lending conditions and historic house
By Leith van Onselen Some interesting analysis has been released recently showing the inflationary impact that foreign capital is having on international housing markets. The first piece of analysis, published in VOX, shows how foreign investor demand “has had a significant positive effect on house price growth in the last 15 years” in the UK,
By Leith van Onselen South China Morning Post’s Yonden Lhatoo has clearly had enough of the shoebox apartments being constructed around Hong Kong, penning the following rant: Emperor International Holdings has entered the hall of shame for heartless developers putting profit before people, with plans to build the tiniest homes in the city. With these
Cross-posted from Medium: Many people find the economics of housing complicated. The two authors of this article attempt to present a hopefully simple overview of the key points. Phil Hayward explains how growth boundaries causes excessive housing inflation and Brendon Harré responds to explain why intensification restrictions may also need to be loosened. The basic
By Leith van Onselen Back in June I published a disturbing report aired on SBS Dateline examining the large-scale migration/investment of wealthy Chinese into Canada’s city of Vancouver, which has forced house prices to astronomical levels and left a swathe of empty homes. The Dateline segment followed a report presented to the City in March
From Morgan Stanley: Our new Global Coincident Indicator (MSGCI) points to faster GDP growth of 3.0% in 3Q16 vs. our mid-July forecast of 2.4%. Upside surprises came from better-than-expected DM dynamics, which could give DM a better ramp into 2017 and seems to have made central banks become less dovish. Nothing but upside surprises to
By Leith van Onselen The latest data from the IMF’s Global Housing Watch reveals that real house prices globally have recovered to 2007 levels, although there is wild divergence between countries: There is a fair bit of cross-country variation, as shown in Figure 2. While house prices have increased over the past year in most
By Leith van Onselen British Columbia’s (BC) Premier, Christy Clark, has unveiled a new proposal to levy an additional 15% property transfer tax on foreign buyers in a bid to rein-in runaway housing costs in Vancouver. From CTV News: The government took aim at foreign buyers Monday, highlighting housing data that indicates they spent more
By Martin North, cross-posted from the Digital Finance Analytics Blog: The latest Financial Stability report released by the Bank of England provides insights into the UK mortgage market, and some of the concerns the regulators are addressing. Of note is the information on “Buy-to-Let” loans, or Investment Mortgage Loans. Most striking is the strong concerns
By Leith van Onselen Yesterday I published a disturbing report aired on Tuesday’s SBS Dateline examining the large-scale migration/investment of wealthy Chinese into Canada’s city of Vancouver, which has forced house prices to astronomical levels and left a swathe of empty homes. The Dateline segment follows a report presented to the City in March
By Leith van Onselen I wrote yesterday how the new mayor of London, Sadiq Khan, had spoken-out about foreign investors using homes in London as “gold bricks for investment” following an investigation which found that the UK’s tallest residential skyscraper is now more than 60% foreign-owned and is under-occupied. Now The Guardian’s Simon Jenkins has
By Leith van Onselen The mayor of London, Sadiq Khan, has spoken out about foreign investors using homes in London as “gold bricks for investment” following an investigation which found that the UK’s tallest residential skyscraper is now more than 60% foreign-owned and is under-occupied. From The Guardian: Khan warned that building thousands of new
From Bloomie: Hong Kong property prices have declined and sales are hovering near a 25-year low as the city grapples with the repercussions of a slowing Chinese economy. Home prices have dropped about 13 percent from a peak in September, according to data compiled by Centaline Property Agency Ltd. “Hong Kong’s in a worse position
By Leith van Onselen The 12th Annual Demographia International Housing Affordability Survey has just been released and, once again, it ranks Australia as having one of the most expensive housing markets out of the countries surveyed. This year’s report assesses 367 urban markets in nine countries: Australia, Canada, Hong Kong, Ireland, Japan, New Zealand, Singapore,
By Leith van Onselen In late October, Canada’s The Globe and Mail ran an article on how mortgage fraud is thriving in Canada’s red hot housing market, mostly via the mortgage broking industry, raising risks for financial stability: In some cases borrowers are simply trying to buy a home that is out of their reach
By Martin North, cross-posted from the Digital Finance Analytics Blog: The second consultative document on Revisions to the Standardised Approach for credit risk has been released for discussion. There are a number of significant changes to residential property risk calculations . These guidelines will eventually become part of “Basel IV”, and will apply to banks
By Leith van Onselen Hot on the heels of the recent academic study examining home sales in Vancouver’s west-side, which found that an incredible 73% of all buyers were Chinese, Canada’s state-owned funder of mortgage-backed securities, the CMHC, has admitted that foreign buyers may be behind a “substantial portion” of luxury home purchases in Vancouver
By Leith van Onselen At last, a comprehensive dataset has proven that demand from Chinese buyers has pushed Vancouver detached house prices to astronomic levels. As reported in the National Post, an academic study examining all sales within three west-side neighborhoods in Vancouver over a six-month period has found that Ethnic Chinese comprised an incredible
By Leith van Onselen For several years now, I have been a passive observer of the Canadian economy and housing market, which has some striking similarities to Australia. Both economies are commodity exporters. Both countries have experienced high rates of immigration. Both countries largely dodged the global recession that shocked the developed world. Both countries use
By Leith van Onselen For years I have argued that the retirement of the large baby boomer generation – a cohort that represents around 25% of Australia’s population but holds roughly half of the nation’s housing and financial assets – would eventually pose stiff headwinds for asset values, since many boomers would look to divest
By Leith van Onselen Former Reserve Bank of New Zealand (RBNZ) and New Zealand Treasury special adviser, Michael Reddell, has made some outstanding contributions over the years. While working at the RBNZ last year, Reddell wrote a cracking paper questioning the merits of New Zealand’s high immigration program, which appears to have crowded-out (through higher interest
By Leith van Onselen Former Reserve Bank of New Zealand (RBNZ) and New Zealand Treasury special adviser, Michael Reddell, is a rare breed. While working at the RBNZ last year, Reddell wrote a cracking paper questioning the merits of New Zealand’s high immigration program, which appears to have crowded-out (through higher interest rates and a high
By Leith van Onselen In an interesting contrast to the Abbott Government’s do-nothing approach, the Conservative Government in the United Kingdom (UK) has announced that it will wind-back its own form of ‘negative gearing’ in a bid to give first home buyers greater access to housing. From The AFR: David Cameron’s Conservative Party has handed
By Leith van Onselen The shortsightedness of Glenn Stevens’ comments last year that macro-prudential controls on high risk mortgage lending were “dreaded” and the “latest fad” has, once again, been exposed with a new literature review from economists Kenneth N. Kuttner and the Bank for International Settlements’ Ilhyock Shim finding that macro-prudential controls are effective in
Last night saw a big move in global bond yields. The trigger was the return of European inflation in May registering an overpowering 0.3% on the year: That sent German bunds into a tizzy with the long end flogged 21bps (or 40%) to 0.71%: The US followed despite weak data on the night and its yield
By Leith van Onselen The…ahem…shortsightedness of Glenn Stevens’ comments last year that macro-prudential controls on high risk mortgage lending were “dreaded” and the “latest fad” has, once again, been exposed with a new working paper from the International Monetary Fund (IMF) which evaluates evidence from 119 countries over the 2000-13 period and finds that macro-prudential policies
By Leith van Onselen Yesterday, while reading Interest.co.nz’s Top 10, I came across an interesting article published last month in The Economist, which explained how for decades banks in developed nations have been boosting mortgage lending at the expense of businesses, hurting entrepreneurship and productivity in the process: … the traditional view that banks primarily
By Leith van Onselen There’s a lot of media reports today about the impact of falling oil prices on the Canadian housing market, which has led to a dramatic fall in sales, particularly near the oil patch in Alberta. According to the Canadian Real Estate Association (CREA), Canadian home sales fell by 3.1% in January
By Leith van Onselen Thousands of Londoners gathered outside City Hall over the weekend protesting over spiraling housing costs and the lack of affordable housing options across the capital. According to The Guardian, The March for Homes brought together 5,000 campaigners, tenants and trade unionists to demand building of council homes and the curbing of
By Leith van Onselen Interest.co.nz’s Bernard Hickey wrote an interesting post over the weekend analysing land banking in and around Auckland, which has been “turbo charged” by the city’s urban growth boundary (UGB), called the “Metropolitan Urban Limit” or MUL: Expectations are a powerful thing. They’re the reason as many as 45,000 sections in Auckland
