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Australia’s central bank unexpectedly raised its key interest rate and kept the door open to further hikes, fretting that policy needs to be tighter in order to be confident that inflation will return to target in mid-2025.
More than a dozen Chinese property firms face the risk of delisting from the country’s stock exchange, an event that will shut an important funding channel for the beleaguered industry.
Morgan Stanley plans to move to a new office in Singapore, seeking a bigger space in the city-state’s financial district to accommodate its expansion.
Singapore’s latest property tax — now one of the highest among global markets — has dented foreign demand. Foreign buyers bought 57 private apartments in May, down 50% from April, according to Savills Singapore’s analysis of data from the Urban Redevelopment Authority.
Family members of a prominent supporter of conservative Republican causes — including a Hamptons real estate agent — died Sunday when their private jet crashed after flying over sensitive government sites in Washington without permission, setting off a security scare.
Sep 12, 2018
, Bloomberg News
Housing market dangers are “especially acute” in Australia, Hong Kong, Canada and Sweden, Oxford Economics said, noting this has historically posed a threat to economic activity.
“In all four, valuations are very elevated, there has been a lengthy housing boom, debt levels are high and there is a significant share of floating rate debt,” Adam Slater, lead economist at Oxford, said in a research note.
On the positive side, it notes risks are relatively limited in key markets like the U.S., Germany, France, China and Japan. In addition, across most economies there has been no significant recent rise in mortgage rates, which have even fallen in some cases.
“So, the classic ‘trigger’ for house price declines is largely absent,” Slater said. “However, rising rates are not strictly necessary for prices to start falling.”
House prices are falling in Australia, down almost 3 per cent in the year through August in major cities, and 5.6 per cent in the Sydney market. Meanwhile, three of the nation’s four major banks raised mortgage rates in recent weeks, blaming higher funding costs. The increases came even as the central bank leaves official rates at a record low.
Oxford said it compared markets across OECD countries from 1970 to 2013 and found a clear negative relationship. Where valuations had risen 35 per cent or more above the long-term average over that period, real house prices fell 75 per cent of the time over the following five years, it said.
“This points to many OECD countries seeing stagnant or negative real house price growth in the next few years: the scope for a further house price ‘melt-up’ in highly valued markets looks extremely limited,” Slater said.
Stretched valuations also matter because house price changes can have a significant impact on economic activity, Oxford said, citing a sample of 83 house price booms. It also found house prices tended to fall after booms, and often substantially.
“For the G7 countries, we find a positive relationship between consumer spending and real house prices from 1997, albeit possibly weakening in recent years,” Slater said.
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