
Vietnam Builders Halt $34 Billion Projects as Crisis Lingers
Vietnam builders have suspended more than 1,200 real estate projects worth 800 trillion dong ($34 billion) as funding woes continue to beset the industry.
Latest Videos
The information you requested is not available at this time, please check back again soon.
Vietnam builders have suspended more than 1,200 real estate projects worth 800 trillion dong ($34 billion) as funding woes continue to beset the industry.
UK house prices resumed their decline, with Nationwide Building Society warning that headwinds for property sellers are increasing.
UK mortgage approvals fell unexpectedly, and borrowers repaid debt at a historic pace after soaring interest rates increased the cost of serving loans.
China’s manufacturing surveys this week provided contradictory signals of factory activity in May, suggesting the outlook for the world’s second-largest economy remains uncertain and policymakers may need to do more to spur growth.
After more than 20 years, British Land’s time in the prestigious FTSE 100 index is coming to an end, falling victim to the turmoil rising interest rates are causing in the commercial property market. It’ll be replaced by IMI Plc, the Birmingham-based engineering company. It also means Ocado, whose shares have fallen as the cost-of-living crisis squeezes its customers, has narrowly avoided demotion.
Sep 16, 2021
Bloomberg News
,(Bloomberg) -- Some property in parts of Australia exposed to climate change and wild weather could experience valuation declines that leave lenders with less protection in the event of a default, according to Reserve Bank research.
About 3.5% of dwellings in Australia already fall under an international definition of being at “high risk” from climate damage, RBA economists Kellie Bellrose, David Norman and Michelle Royters said in a research paper.
But the RBA economists note that it’s the rise in climate risk that isn’t yet reflected in property prices that’s key when considering the banks’ exposures in climate-sensitive regions.
The problem could be acute in Australia, the world’s driest inhabited continent, as mortgages account for about two-thirds of major banks’ portfolios, according to the research.
“Climate change creates risks for the Australian financial system that will rise over time to become substantial if they are not properly managed,” they wrote. “If current values do not fully reflect the longer-term risks of climate change, housing prices could decline, leaving banks with less protection than expected against borrower default.”
To estimate potential climate change impact on mortgage books, the researchers translated estimated falls in housing prices in climate-sensitive suburbs by 2050 into an implied change in borrower leverage, as measured by loan-to-value ratios.
The outcome suggest climate change will result in around 400,000 more loans, or 2.5% of all loans, having a loan-to-value ratio greater than 80%. Within this, around half move to greater than 90%.
Classifying a dwelling as “high risk” is based on the so-called value at risk -- that is, the annual expected cost of climate-related damage relative to the replacement cost of dwellings -- exceeding 1%.
A VaR change of 0.4 percentage point is equivalent to roughly a 10% decline in housing prices due to climate risk, according to the paper. Increases in insurance premium costs “would be incurred every year, and therefore could result in sizable declines in property values.”
Under a different methodology used as a cross-check, the regions projected to see the biggest rise in the proportion of properties as high risk out to 2050 include populous areas in southeastern Queensland and northern New South Wales, which have a large number of houses at risk of coastal inundation.
The authors acknowledged limitations to this method. The risks to banks “may be overstated in this exercise because we assume that banks’ exposures will not change in the future,” though banks are expected to increasingly incorporate climate risks into their lending decisions.
©2021 Bloomberg L.P.