31-07-2014, 01:03 PM
Quite frankly, I m not concern over Aussie property prices. Australia is too big a country to have widespread bubble. The bubble that we are seeing right now are largely the result of the pricing of new builts and perhaps in NSW where supply has been historically the issue. New builts are largely sold to locals and foreigners.
One thing that not many are aware is that Aussie has got a large rental base - not something that many can appreciate - some people rent for the rest of the lives. Hence, so long as population growth (both organically and via migration) sustained over the long term, housing price appreciation will be there for long term.
In any markets, there will always be ups and downs. However, in this age of information revolution, news can get exaggerated by a few times and hence many people get mis-informed.
GG
One thing that not many are aware is that Aussie has got a large rental base - not something that many can appreciate - some people rent for the rest of the lives. Hence, so long as population growth (both organically and via migration) sustained over the long term, housing price appreciation will be there for long term.
In any markets, there will always be ups and downs. However, in this age of information revolution, news can get exaggerated by a few times and hence many people get mis-informed.
GG
(31-07-2014, 11:45 AM)specuvestor Wrote: [ -> ]UK and Aussie property prices are what people should be worried about
Hong Kong, Singapore Pop Housing Bubbles London Can’t Handle (1)
2014-07-30 05:08:53.130 GMT
(Adds details on U.K. Labour Party proposals in 16th
paragraph.)
By Frederik Balfour
July 30 (Bloomberg) -- Take a look at the world’s dizzying
surges in the price of housing for 12 months at the end of June:
London, up 20 percent. Manhattan, 18 percent. Sydney, 15.4
percent.
Then there are Singapore and Hong Kong: down 3.7 percent
and 0.6 percent.
Prompted by concerns over potential property bubbles and
affordability for the middle class, the governments of the two
Asian cities have been reining in home prices by imposing
measures including mortgage caps, taxes on property flippers,
and levies on foreign buyers as high as 15 percent.
“Hong Kong has successfully cooled down the market in
terms of transactions and turnover,” said Raymond Yeung, senior
economist at Australia & New Zealand Banking Group Ltd. in Hong
Kong. “Singapore has been more effective.”
So could New York, London and other global cities facing
soaring housing prices pull off the same act?
Not really. Hong Kong and Singapore’s island geographies,
preponderance of public housing resulting in two-tier housing
markets and citizens willing to tolerate government directives
make the cities unique, according to academics and researchers.
London and New York have nowhere near the same level of control
over their economies and the behavior of their residents.
Having Clout
Singapore and Hong Kong, as a special administrative region
of China, have governments with policy-making power over their
entire geographic areas, where they are relatively free of
political opposition from neighborhood groups or borough
councils that stymie directives or mitigate their effectiveness.
The Asian cities control the land supply and are the biggest
landlords.
That allows them to implement decisive policy measures. For
example, in January 2013, the Monetary Authority of Singapore,
effectively the central bank and chief regulator, cut the
mortgage ratio allowable on purchases of second homes while more
than doubling minimum down payments from 10 percent to 25
percent. The banks had no choice but to follow.
“Imagine doing something like this in the U.S. where there
are 7,000 banks and many regulators,” said Sumit Agarwal, a
professor in economics, finance and real estate at the National
University of Singapore. “It’s a nightmare from the policy
point of view and would be impossible.”
Hong Kong and Singapore haven’t shied away from using taxes
to discriminate against foreign buyers -- something other
locales with surging prices have yet to do. Non-permanent
residents in both cities are subject to an additional 15 percent
tax when they buy property, except in Singapore where Americans
are exempted by treaty.
Free-Market
While such actions may seem contradictory to the cities’
stated free-market principles, “affordable housing is part of
the legitimacy of any government, and government has a role to
play in intervening in the market in periods where there are
extreme circumstances,” said Michael Klibaner, who heads
Greater China research at real estate firm Jones Lang LaSalle
Inc. in Hong Kong.
The U.K. government has tried some measures. After it
increased the stamp duty to 7 percent on high-value properties
in March 2012, price increases for homes valued from 5 million
pounds to 10 million pounds ($8.5 million to $17 million) slowed
from 9.7 percent to 5.8 percent in the subsequent year,
according to broker Knight Frank LLP.
Bank of England Governor Mark Carney announced another set
of measures last month, citing concerns over household
indebtedness and the threat of a property bubble. They limit
mortgages to less than 4.5 times a borrowers’ annual income and
require banks to refuse loans to those failing to prove they
could afford a 3 percentage-point rise in interest rates.
Stagnant Prices
They may be working. Prices in the capital stagnated in
July, the first month with no growth since December 2012.
Meanwhile, the opposition Labour Party has backed away from
a call for a flat tax on properties worth more than 2 million
pounds, instead suggesting taxes that rise the more expensive a
property is, if they win next year’s U.K. national election.
Labour’s Treasury spokesman, Ed Balls, writing in the
London Evening Standard newspaper, suggested a lower band for
homes valued at between 2 million pounds and 5 million pounds.
Further bands would go up to 10 million pounds and 20 million
pounds, with the top rate levied on properties above 20 million
pounds. The thresholds would increase in line with average house
prices.
Least likely to be deterred are well-heeled buyers from
Russia, the Middle East and Asia looking to park their money in
tony London neighborhoods, the ones who have helped drive up the
prices, said Matthew Pointon, a property economist at Capital
Economics Ltd. in London.
“Wealthy people who buy these houses just pay it,” said
Pointon, adding that the government isn’t interested in
discouraging the influx of money. “The government is always
very keen to portray London as open for business to the world.”
Preferential Treatment
Foreigners in Britain enjoy preferential tax treatment over
locals, as they are currently exempt from paying capital gains.
This benefit will cease when new legislation takes effect in
April bringing the U.K. into line with the U.S. and Australia
which charge capital gains on non-residents. (Hong Kong has no
capital gains tax while Singapore taxes non- residents.)
In Australia, foreigners bought a record 14 percent of new
properties in the first three months of the year, based on a
survey of property professionals by National Australia Bank Ltd.
In New York, there’s not much likelihood of foreign buyers
facing additional costs, said Jones Lang LaSalle’s Klibaner, a
native New Yorker.
“If you live in Manhattan, you aren’t going to blame the
government for bad policies or become a xenophobe because too
many rich Chinese and Russians are buying apartments on Central
Park,” he said. “When you want to get on the property ladder,
you start in Queens or Brooklyn or New Jersey.”
<Snip>
Hong Kong isn’t entirely without resistance. In June, an
angry mob forced its way into the Legislative Council to protest
a plan to relocate villages to make way for high rises.
“Governments in Hong Kong or the U.K. or China all have
the same dilemma,” said Hui, the Hong Kong Polytechnic
professor. “Home prices are high, and we all know we have to do
something. But when they announce measures against our interests
we tell them to do it in someone else’s backyard.”
Ultimately, markets may play a greater role in solving the
problem of rising prices once global interest rates start
rising. At that time, said ANZ’s Yeung, “the global housing
bubble, or boom, will come to an end.”
http://www.bloomberg.com/news/2014-07-29...andle.html
