
Bear Calls Are Getting Louder on European Real Estate Stocks
Everything is looking down for Europe’s worst-hit sector: Real estate.
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Everything is looking down for Europe’s worst-hit sector: Real estate.
US mortgage rates edged down to a six-week low of 6.45%, helping drive a fourth-straight advance in applications to buy a home.
The Bank of England warned the next blow up in financial markets may be triggered by corporate credit after a massive build-up in private debt over the past decade.
Global creditors are bracing for a long-drawn battle to recover money from China’s troubled developers, as a property meltdown continues to roil the nation’s $735 billion offshore bond market for a third straight year.
UK mortgage approvals rose more than forecast in February, adding to signs that the housing market is starting to stabilize following the blow inflicted by the autumn’s market turmoil.
Mar 12, 2021
BNN Bloomberg
,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