https://www.smh.com.au/politics/fed...s-of-living-standard-hit-20210909-p58q5p.html Sydney house values climb $850 a day amid fears of living standard hit By Shane Wright September 11, 2021 The average new mortgage to buy an established house in NSW has soared by more than $200,000 in two years amid a nationwide glut of home lending, raising fears our obsession with pumping money into real estate may hurt Australia’s long-term living standards. As Sydney’s median house price climbs by almost $850 each day, economists warn future wage increases will be lower because so much money goes into bricks and mortar and holds back investment in businesses or life-changing technological advances. The Reserve Bank resumed cutting official interest rates in mid-2019 in a bid to get the economy expanding faster to drive down unemployment and push up wages growth. The advent of the coronavirus pandemic last year forced it to cut rates to a record low of 0.1 per cent while starting a quantitative easing program that has pumped more than $200 billion into the financial system. Since it started cutting rates, the average mortgage to buy an established house in NSW has jumped from almost $554,000 to a record $755,000 in July, an increase of 36 per cent over two years. The average mortgage has grown in every state and territory over that period. In Victoria, it has climbed by a third to $634,000, in Canberra it has increased by 28 per cent to $575,000 while across Queensland it is now $478,000 after lifting by 22 per cent. The mortgages have been needed to deal with house prices that have soared, especially since the middle of last year. Sydney’s median house price is now $1.3 million, a jump of $308,000 over the past 12 months, or $843 a day. Melbourne’s median house price, as measured by CoreLogic, is now $955,000 after increasing by $473 a day over the past year. Canberra, along with Melbourne, will soon join the $1 million club, with the median house value there now at $934,000. It has increased by almost $596 a day. The big run-up in prices has resulted in the nation’s banks now holding a record $1.9 trillion in mortgages to owner-occupiers and investors. Loans to owner-occupiers have lifted by $145 billion in just two years. It’s that leap in mortgages, being funnelled into the property market, that has economists worried. RBC Capital Markets chief economist Su-Lin Ong says the country has pumped hundreds of millions of dollars into property. Credit: Dominic Lorrimer RBC Capital Markets managing director Su-Lin Ong said a huge amount of capital was being driven into housing instead of more productive pursuits by low interest rates, government incentives and the tax system. She said while construction was a key part of the economy, it did not employ as many people as the professional and scientific sectors. Banks found it much safer, and easier, to hand over hundreds of thousands of dollars to people to buy an existing home rather than sinking it into a new business. “You can apply for a home loan on an app, but it’s a hundred times harder for an SME to get a loan,” she said. “From a bank’s point of view, it is a safer channel for lending. It’s a much higher risk profile to lend to business.” Ms Ong said if more money went into research and development or innovative companies, there would a long-term benefit to the country. “It’s a simple question of opportunity cost. What aren’t we doing because we’re putting so much money into housing?” she said. Earlier this year, the Bank for International Settlements, which acts as the central bank to the world’s central banks, released research showing that while higher house prices delivered a short-term boost to economic activity via higher household consumption, longer-term productivity was actually lower. In Australia, the Productivity Commission earlier this year found productivity growth in the decade to 2020 had fallen to its slowest rate in 60 years. Stephen Anthony, chief economist with Macroeconomics Advisory, said without a lift in productivity, all Australians would suffer. “If you want living standards to improve, if you want wages to increase, then you need an increase in productivity,” he said. Mr Anthony said both here and around the developed world, housing had become a Ponzi scheme that was being propped up by both central banks and governments. He said with monetary policy totally exhausted, governments had to step up by putting in place policies that rewarded risk taking and ensuring all their spending was done with an eye to efficiency. “You need to stop the buckets of money that are leaking,” he said. “That means making sure every dollar is spent properly, is doing what it’s supposed to do. That means looking at decisions around health, around aged care, around hospitals – if you’re going to spend money then do it wisely.”
Australian property values are rising at a rate of $200 billion every month, as the real estate market shatters new records Jack Derwin Sep. 14, 2021 https://www.businessinsider.com.au/australian-property-prices-growth Property prices in Australia have broken a whole new string of records. (Brendon Thorne, Bloomberg via Getty Images) The astounding price growth produced by Australia’s runaway property market is quantified by the latest ABS data. National values rose by almost $600 billion in the three months to June, with the average home price rising by $52,600. Outstripping wage growth by a country mile, Indeed economist Callam Pickering said it “has never been more difficult to raise a [home] deposit”. A red hot real estate market has shattered nearly every record in the book as Australian property prices continue to defy gravity. On Tuesday, new ABS figures quantified just how absurd recent price growth has become, documenting the impact of the three months to June. Over the period, home values rose by an all-time record $596.4 billion, with the total market valuation swelling to an eye-watering $8.9 trillion. To put that in perspective, just one year ago, that figure was $7.2 trillion. Breaking that down, the average Australian home is now selling for $835,700, having soared $52,600 in just 90 days. It’s unsurprising such rapid-fire growth has completely left wage growth in its dust. “Australia’s dwelling price-to-income ratio [has reached] a new high, increasing by 7.4% in the June quarter and exceeding its previous peak in December 2017,” Indeed Asia-Pacific chief economist Callam Pickering said. “It’s also 37% above its 2003 to 2014 average, reflecting the influence of much lower mortgage rates.” “What the ratio is effectively saying is that it has never been more difficult to raise a deposit to purchase a property.” ABS head of prices statistics Michelle Marquardt attributed the price pressure to “persistently low levels of stock” being immediately absorbed by strong demand, which in turn has been inflated by the abundance of cheap money. “With the exception of Hobart and Darwin, capital cities continued to see house price rises outpace those of attached dwellings such as apartments and units, with price growth for both property types being driven by the upper segments of the market,” Marquardt said. In capital cities, the average house price rose by 7.7% and unit prices by 4.3% between April and June. Canberra has led the trend higher, with prices rising 8.2%, the most quarterly growth on record in the Bush Capital. In fact, most capital cities broke decade-long records. Hobart prices rose faster than at any time since 2003, and 2007 in Brisbane and Adelaide. In Melbourne, you’d have to go back to 2009 to find a bigger quarter, while Sydney hasn’t had a quarter like it in six years. The average home now costs almost $1.1 million in New South Wales, $891,000 in Victoria and the ACT, and $835,000 nationwide. Addressing the Anika Foundation on Tuesday, RBA Governor Philip Lowe said the positive wealth effect would help encourage households to spend and fuel the recovery in the coming months. Yet he also acknowledged that there was growing concern that many Australians were being priced out entirely. While record low interest rates haven’t helped, Lowe conceded, ultimately it was only federal and state government who were not only responsible but capable of addressing the affordability issue.
RBA says surging house prices are a government problem By Shane Wright September 15, 2021 The Reserve Bank has urged governments to deal with tax and social security policies to bring surging house prices under control after new figures showed the biggest jump in nationwide property values on record. As the OECD said tax changes that skewed away from the housing sector would strengthen the economy and improve overall “household wellbeing”, RBA governor Philip Lowe said there were legitimate public policy issues around high property prices. Australian Bureau of Statistics data showed a 6.7 per cent jump in the June quarter in its measure of house prices.Credit:Bloomberg Data from the Australian Bureau of Statistics on Tuesday showed a 6.7 per cent jump in the June quarter in its measure of house prices. It was the largest three-month increase on record and took the annual increase to 16.8 per cent. The average price of a house in Australia is now a record $835,700, up from $689,400 a year ago. In Sydney, prices rose by 8.1 per cent in the quarter to be 19.3 per cent up over the year. In Melbourne, they increased by 6.1 per cent in the quarter for annual growth of 15 per cent. Canberra house prices, up 19.1 per cent over the past 12 months, are now increasing at their fastest rate on record. The slowest capital is Adelaide where prices still increased by 5.3 per cent in the quarter to be 14.2 per cent up over the year. Dr Lowe, in a speech on the state of the economy, said an increase in interest rates to deal with surging house prices was not on the RBA’s agenda, arguing such a move would “mean fewer jobs and lower wages growth”. He conceded there were public policy issues caused by high house prices, arguing those issues were best addressed by dealing with structural factors that pushed up the value of land. “The factors include: the design of our taxation and social security systems; planning and zoning restrictions; the type of dwellings that are built; and the nature of our transportation networks,” he said. “These are all obviously areas outside the domain of monetary policy and the central bank.” Dr Lowe, who conceded low interest rates contributed to higher house prices, said based on current levels of inflation and wages growth the RBA was unlikely to lift rates until 2024. The OECD, in its survey of the Australian economy released on Wednesday morning, identified two tax policies that were contributing to higher house prices. It said the current 50 per cent capital gains tax discount was “very generous” and distorted investment decisions by skewing households to sink money into residential property. Replacing the discount with a “cost-base indexation” model, which would sharply reduce the amount of gain excluded from any tax, would raise $4.1 billion in revenue over four years. The OECD said negative gearing, with the capital gains tax discount, effectively led to “tax planning and breaches principles of tax neutrality”. “Tackling structural factors that might skew Australian household balance sheets towards residential property investment could reduce vulnerabilities and improve household wellbeing,” it found. Another option suggested by the OECD was to exclude inherited properties from the capital gains tax discount system. Australia is one of the few nations in the world without an inheritance tax. The OECD said the surge in house prices was also affecting other parts of the economy. It noted the wealth of many pensioners had been inflated by the strong property market, but this group of people were still being paid the age pension as the family home was excluded from the pension assets test. “Half of the government’s spending on the age pension currently goes to people with more than $500,000 in assets,” it said.
Blackstone rides global housing boom, plans Aussie expansion James Thomson Columnist Sep 15, 2021 https://www.afr.com/companies/finan...g-boom-plans-aussie-expansion-20210914-p58rm4 US investment giant Blackstone is betting big on a global housing boom, investing in everything from mortgage lenders and garage door makers to family homes as it predicts a shortage of housing stock around the world will keep pushing up prices and eventually force a supply response. Blackstone’s global president and chief operating officer, Jon Gray, has also revealed the firm plans to expand its presence in Australia, creating a corporate debt team as early as next year and deepening its relationships with the $3.3 trillion superannuation sector. Jonathan Gray says Blackstone is a big believer in the Australian market. Gray, speaking exclusively to The Australian Financial Review ahead of his appearance at Morgan Stanley’s Australian summit on Wednesday, says the global economy is in strong shape, propelled by unprecedented levels of monetary and fiscal stimulus, near-record levels of savings and pent-up demand from consumers who’ve emerged from lockdown. “It’s like three streams coming together,” he says. “It’s created almost a torrent of economic activity, and we see that in particular in the US and UK.” A staggering 98 per cent of Blackstone’s private equity portfolio companies reported revenue increases in the June quarter, and just one of its 2500 corporate borrowers defaulted. Gray, who is valued at $US6.7 billion ($9.1 billion) on Bloomberg’s billionaires index, says the delta variant may weigh on the speed of the recovery and remains cautious about whether inflation could eventually trigger interest rate rises. But he concedes he was surprised at just how quickly last year’s crisis gave way to rising asset values and intense competition for assets. I was surprised at the pace of recovery in asset values but I think the most surprising thing was just how quickly all of our lives were altered High valuations mean Blackstone is thinking more about what value it can add to the assets it buys – focusing on the “fix” part of its famous “buy it, fix it, sell it” motto. But Gray says it’s also led Blackstone to focus more on what he describes as “buying in the right neighbourhoods”, doubling down on investment themes “that have really terrific, long-term secular tailwinds”. Technology is a key focus and Gray rattles off a string of investments, from dating site Bumble and genealogy site Ancestry through to online mental health businesses, cybersecurity firms and even Reece Witherspoon’s media business Hello Sunshine, which will develop content for the growing army of streaming sites. Connected to this trend, Blackstone has ridden the e-commerce boom by becoming the world’s biggest investor in property for the logistics sector, including warehouses and ports. It is also investing heavily in the life sciences sector, both via specialty real estate for the sector (including cold storage facilities) and directly into drug development companies. “Yes, I was surprised at the pace of recovery in asset values, but I think the most surprising thing was just how quickly all of our lives were altered and how a bunch of the trends that were in place accelerated,” Grays says. “It was like you hit the ‘super-fast’ button and everything changed really quickly. If as an investor you missed that, you weren’t set up before the crisis and even during it, then this has been a painful period of time. But for folks who were fortunate enough to invest in some of these areas, I think we’ve done a lot better than anyone would have expected.” Blackstone’s share price has surged 145 per cent in the last 12 months, and its market value sits at $US155 billion. What’s particularly attractive about many of Blackstone’s big investment themes, Gray says, is that they are global. That’s also the case for one of its biggest bets: housing. Gray is a real estate investor at heart. After majoring in English at college – he met his wife Mindy in a romantic poetry class and briefly considered journalism before studying business – he joined Blackstone in 1992 and would become just the second employee in its celebrated real estate business. The seeds of Blackstone’s housing bet go back to the GFC, where Gray says housing markets in the United States, Britain, Ireland and Australia “got way ahead of themselves with too much building and too much leverage”. But, in the decade since, housing supply has not kept pace with population growth, leading to a structural shortage of housing right across the world. This shortage has now collided with record-low interest rates, high household savings and a pandemic that has forced people to spend more time in their homes. A snapshot of some of Blackstone’s housing bets shows the depth of its conviction. In Australia, it owns 80 per cent of mortgage lender and fund manager Latrobe Financial. In Britain, it owns an affordable housing developer called Sage Housing. In June, the group paid $US6 billion for Home Partners of America, a rental company that owns more than 17,000 family houses; in August 2020 it took a minority stake in Canada’s Tricon Residential, which owns and operates more than 31,000 homes and apartments. “We have a broad-based constructive view on housing, based on the shortage that has existed,” Gray says. “And the only positive here about the sharp run up in price is I do think it’s going to induce more home construction.” Blackstone is ready for that trend too; it has made several investments in firms linked to home construction, including last week’s $US5 billion purchase of Chamberlain Group, which makes garage door openers. While Gray says life is returning to normal in his home town of New York – he and his colleagues are back in the office, with twice-weekly COVID tests as a safety measure – he is eager to get down to Australia. Blackstone’s Australian operation, which is more than 10 years old and has about $10 billion under management, has so far focused on private equity (under the leadership of James Carnegie) and real estate investing (under Chris Tynan) and Gray says the firm is hunting more deals in both areas; in sectors such as healthcare and tourism for PE, and in logistics property for the real estate business. Blackstone also holds a 9.9 per cent stake in beleaguered casino giant Crown Resorts. Gray says he’s unable to comment on the group’s travails, but says Blackstone is carefully monitoring its investment and remains bullish on a post-pandemic recovery in global tourism. Gray’s ambition in Australia is to create what he describes as a “mini-Blackstone” by eventually bringing all the firm’s verticals Down Under. This will start next year with the establishment of a corporate debt team. “For us, it’s a market we really believe in,” he says. “It’s an incredibly productive place with lots of entrepreneurial people, tremendous rule of law and really good demographics. As soon as COVID passes I would be bullish that Australia will exceed most people’s expectations in terms of economic growth.” A big attraction for a firm like Blackstone is, of course, Australia’s giant superannuation sector, where Gray is keen to establish deeper relationships as the super giants push harder into private markets and alternative assets. “We’ve raised some money, but it’s been a little more challenging – the focus has often been just on cost, not as much on net returns by the manager. That’s starting to change and, at the same time, we as a firm have been broadening what we do ... and now with things like core-plus real estate [and] infrastructure direct lending, we have some products that are lower return, lower cost products that may work well.”
https://www.bloomberg.com/news/feat...-and-it-s-getting-political?srnd=premium-asia Graffiti made during a protest in May, in Minnesota, calling for an end to housing evictions during the pandemic. Photographer: Michael Sulik/Universal Images Group/Getty Images The Global Housing Market Is Broken, and It’s Dividing Entire Countries The dream of owning a home is increasingly out of reach. Democratic and authoritarian governments alike are struggling with the consequences. By 20 September 2021 Soaring property prices are forcing people all over the world to abandon all hope of owning a home. The fallout is shaking governments of all political persuasions. It’s a phenomenon given wings by the pandemic. And it’s not just buyers — rents are also soaring in many cities. The upshot is the perennial issue of housing costs has become one of acute housing inequality, and an entire generation is at risk of being left behind. “We’re witnessing sections of society being shut out of parts of our city because they can no longer afford apartments,” Berlin Mayor Michael Mueller says. “That’s the case in London, in Paris, in Rome, and now unfortunately increasingly in Berlin.” A Winter of Housing Discontent protest in Dublin in Sept. Ireland still bears the scars of a crash triggered by a housing bubble that burst during the financial crisis. Photographer: Brian Lawless/PA Images/Getty Images That exclusion is rapidly making housing a new fault line in politics, one with unpredictable repercussions. The leader of Germany’s Ver.di union called rent the 21st century equivalent of the bread price, the historic trigger for social unrest. Politicians are throwing all sorts of ideas at the problem, from rent caps to special taxes on landlords, nationalizing private property, or turning vacant offices into housing. Nowhere is there evidence of an easy or sustainable fix. In South Korea, President Moon Jae-in’s party took a drubbing in mayoral elections this year after failing to tackle a 90% rise in the average price of an apartment in Seoul since he took office in May 2017. The leading opposition candidate for next year’s presidential vote has warned of a potential housing market collapse as interest rates rise. China has stepped up restrictions on the real-estate sector this year and speculation is mounting of a property tax to bring down prices. The cost of an apartment in Shenzhen, China’s answer to Silicon Valley, was equal to 43.5 times a resident’s average salary as of July, a disparity that helps explain President Xi Jinping’s drive for “common prosperity.” In Canada, Prime Minister Justin Trudeau has promised a two-year ban on foreign buyers if re-elected. The pandemic has stoked the global housing market to fresh records over the past 18 months through a confluence of ultra-low interest rates, a dearth of house production, shifts in family spending, and fewer homes being put up for sale. While that’s a boon for existing owners, prospective buyers are finding it ever harder to gain entry. What we’re witnessing is “a major event that should not be shrugged off or ignored,” Don Layton, the former CEO of U.S. mortgage giant Freddie Mac, wrote in a commentary for the Joint Center for Housing Studies of Harvard University. In the U.S., where nominal home prices are more than 30% above their previous peaks in the mid-2000s, government policies aimed at improving affordability and promoting home ownership risk stoking prices, leaving first-time buyers further adrift, Layton said. The result, in America as elsewhere, is a widening generational gap between Baby Boomers, who are statistically more likely to own a home, and Millennials and Gen Z — who are watching their dreams of buying one go up in smoke. Existing housing debt may be sowing the seeds of the next economic crunch if borrowing costs start to rise. Niraj Shah of Bloomberg Economics compiled a dashboard of countries most at threat of a real-estate bubble, and says risk gauges are “flashing warnings” at an intensity not seen since the run-up to the 2008 financial crisis. In the search for solutions, governments must try and avoid penalizing either renters or homeowners. It’s an unenviable task. Sweden’s government collapsed in June after it proposed changes that would have abandoned traditional controls and allowed more rents to be set by the market. In Berlin, an attempt to tame rent increases was overturned by a court. Campaigners have collected enough signatures to force a referendum on seizing property from large private landlords. The motion goes to a vote on Sept. 26. The city government on Friday announced it'd buy nearly 15,000 apartments from two large corporate landlords for 2.46 billion euros ($2.9 billion) to expand supply. Anthony Breach at the Centre for Cities think tank has even made the case for a link between housing and Britain’s 2016 vote to quit the European Union. Housing inequality, he concluded, is “scrambling our politics.” As these stories from around the world show, that’s a recipe for upheaval. Argentina With annual inflation running around 50%, Argentines are no strangers to price increases. But for Buenos Aires residents like Lucia Cholakian, rent hikes are adding economic pressure, and with that political disaffection. Like many during the pandemic, the 28-year-old writer and college professor moved with her partner from a downtown apartment to a residential neighborhood in search of more space. In the year since, her rent has more than tripled; together with bills it chews through about 40% of her income. That rules out saving for a home. “We’re not going to be able to plan for the future like our parents did, with the dream of your own house,” she says. The upshot is “renting, buying and property in general” is becoming “much more present for our generation politically.” Legislation passed by President Alberto Fernandez’s coalition aims to give greater rights to tenants like Cholakian. Under the new rules, contracts that were traditionally two years are now extended to three. And rather than landlords setting prices, the central bank created an index that determines how much rent goes up in the second and third year. It’s proved hugely controversial, with evidence of some property owners raising prices excessively early on to counter the uncertainty of regulated increases later. Others are simply taking properties off the market. A government-decreed pandemic rent freeze exacerbated the squeeze. Rental apartment listings in Buenos Aires city are down 12% this year compared to the average in 2019, and in the surrounding metro area they’re down 36%, according to real estate website ZonaProp. The law “had good intentions but worsened the issue, as much for property owners as for tenants,” said Maria Eugenia Vidal, the former governor of Buenos Aires province and one of the main opposition figures in the city. She is contesting the November midterm elections on a ticket with economist Martin Tetaz with a pledge to repeal the legislation. “Argentina is a country of uncertainty,” Tetaz said by phone, but with the housing rules it’s “even more uncertain now than before.” Cholakian, who voted for Fernandez in 2019, acknowledges the rental reform is flawed, but also supports handing more power to tenants after an extended recession that wiped out incomes. If anything, she says greater regulation is needed to strike a balance between reassuring landlords and making rent affordable. “If they don’t do something to control this in the city of Buenos Aires, only the rich will be left,” she says. —Patrick Gillespie Australia As the son of first-generation migrants from Romania, Alex Fagarasan should be living the Australian dream. Instead, he’s questioning his long-term prospects. Fagarasan, a 28-year-old junior doctor at a major metropolitan hospital, would prefer to stay in Melbourne, close to his parents. But he’s being priced out of his city. He’s now facing the reality that he’ll have to move to a regional town to get a foothold in the property market. Then, all going well, in another eight years he’ll be a specialist and able to buy a house in Melbourne. Even so, he knows he’s one of the lucky ones. His friends who aren’t doctors “have no chance” of ever owning a home. “My generation will be the first one in Australia that will be renting for the rest of their lives,” he says. He currently rents a modern two-bedroom townhouse with two others in the inner suburb of Northcote — a study nook has been turned into a make-shift bedroom to keep down costs. About 30% of his salary is spent on rent; he calls it “exorbitant.” Prime Minister Scott Morrison’s conservative government announced a “comprehensive housing affordability plan” as part of the 2017-2018 budget, including A$1 billion ($728 million) to boost supply. It hasn’t tamed prices. The opposition Labour Party hasn’t fared much better. It proposed closing a lucrative tax loophole for residential investment at the last election in 2019, a policy that would likely have brought down home prices. But it sparked an exodus back to the ruling Liberals of voters who owned their home, and probably contributed to Labor’s election loss. The political lessons have been learned: Fagarasan doesn’t see much help on housing coming from whoever wins next year’s federal election. After all, Labor already rules the state of Victoria whose capital is Melbourne. “I feel like neither of the main parties represents the voice of the younger generation,” he says. It’s a sentiment shared by Ben Matthews, a 33-year-old project manager at a university in Sydney. He’s moving back in with his parents after the landlord of the house he shared with three others ordered them out, an experience he says he found disappointing and stressful, especially during the pandemic. Staying with his parents will at least help him save for a deposit on a one-bedroom flat. But even that’s a downgrade from his original plan of a two-bedroom house so he could rent the other room out. The increases, he says, are “just insane.” “It might not be until something breaks that we’ll get the political impetus to make changes,” he says. —Jason Scott Canada Days after calling an election, Justin Trudeau announced plans for a two-year ban on foreigners buying houses. If it was meant as a dramatic intervention to blind-side his rivals, it failed: they broadly agree. The prime minister thought he was going to fight the Sept. 20 vote on the back of his handling of the pandemic, but instead housing costs are a dominant theme for all parties. Trudeau’s Liberals are promising a review of “escalating” prices in markets including Vancouver and Toronto to clamp down on speculation; Conservative challenger Erin O’Toole pledges to build a million homes in three years to tackle the “housing crisis”; New Democratic Party leader Jagmeet Singh wants a 20% tax on foreign buyers to combat a crisis he calls “out of hand.” Facing a surprisingly tight race, Trudeau needs to attract young urban voters if he is to have any chance of regaining his majority. He chose Hamilton, outside Toronto, to launch his housing policy. Once considered an affordable place in the Greater Toronto Area, it’s faced rising pressure as people leave Canada’s biggest city in search of cheaper homes. The average single family home cost C$932,700 ($730,700) in June, a 30% increase from a year earlier, according to the Realtors Association of Hamilton and Burlington. The City of Hamilton cites housing affordability among its priorities for the federal election, but that’s little comfort to Sarah Wardroper, a 32-year-old single mother of two young girls, who works part time and rents in the downtown east side. Hamilton, she says, represents “one of the worst housing crises in Canada.” While she applauds promises to make it harder for foreigners to buy investment properties she’s skeptical of measures that might discourage homeowners from renting out their properties. That includes Trudeau’s bid to tax those who sell within 12 months of a house purchase. Neither is she convinced by plans for more affordable housing, seeing them as worthy but essentially a short-term fix when the real issue is “the economy is just so out of control the cost of living in general has skyrocketed.” Wardroper says her traditionally lower-income community has become a luxury Toronto neighborhood. “I don’t have the kind of job to buy a house, but I have the ambition and the drive to do that,” she says. “I want to build a future for my kids. I want them to be able to buy homes, but the way things are going right now, I don’t think that’s going to be possible.” —Kait Bolongaro Singapore Back in 2011, a public uproar over the city-state’s surging home prices contributed to what was at the time the ruling party’s worst parliamentary election result in more than five decades in power. While the People’s Action Party retained the vast majority of the seats in parliament, it was a wake-up call — and there are signs the pressure is building again. Private home prices have risen the most in two years, and in the first half of 2021 buyers including ultra-rich foreigners splurged S$32.9 billion ($24 billion), according to Singapore-based ERA Realty Network Pte Ltd. That’s double the amount recorded in Manhattan over the same period. However, close to 80% of Singapore’s citizens live in public housing, which the government has long promoted as an asset they can sell to move up in life. It’s a model that has attracted attention from countries including China, but one that is under pressure amid a frenzy in the resale market. Singapore’s government-built homes bear little resemblance to low-income urban concentrations elsewhere: In the first five months of the year, a record 87 public apartments were resold for at least S$1 million. That’s stirring concerns about affordability even among the relatively affluent. Junior banker Alex Ting, 25, is forgoing newly built public housing as it typically means a three-to-four-year wait. And under government rules for singles, Ting can only buy a public apartment when he turns 35 anyway. His dream home is a resale flat near his parents. But even there a mismatch between supply and demand could push his dream out of reach. While the government has imposed curbs on second-home owners and foreign buyers, younger people like Ting have grown resigned to the limits of what can be done. Most Singaporeans aspire to own their own property, and the housing scarcity and surge in prices presents another hurdle to them realizing their goal, says Nydia Ngiow, Singapore-based senior director at BowerGroupAsia, a strategic policy advisory firm. If unaddressed, that challenge “may in turn build long-term resentment towards the ruling party,” she warns. That’s an uncomfortable prospect for the PAP, even as the opposition faces barriers to winning parliamentary seats. The ruling party is already under scrutiny for a disrupted leadership succession plan, and housing costs may add to the pressure. Younger voters may express their discontent by moving away from the PAP, according to Ting. “In Singapore, the only form of protest we can do is to vote for the opposition,” he says. —Faris Mokhtar Ireland Claire Kerrane is open about the role of housing in her winning a seat in Ireland’s parliament, the Dail. Kerrane, 29, was one of a slew of Sinn Fein lawmakers to enter the Dail last year after the party unexpectedly won the largest number of first preference votes at the expense of Ireland’s dominant political forces, Fine Gael and Fianna Fail. While the two main parties went on to form a coalition government, the outcome was a political earthquake. Sinn Fein was formerly the political wing of the Irish Republican Army, yet it’s been winning followers more for its housing policy than its push for a united Ireland. “Housing was definitely a key issue in the election and I think our policies and ambition for housing played a role in our election success,” says Kerrane, who represents the parliamentary district of Roscommon-Galway. Ireland still bears the scars of a crash triggered by a housing bubble that burst during the financial crisis. A shortage of affordable homes means prices are again marching higher. Sinn Fein has proposed building 100,000 social and affordable homes, the reintroduction of a pandemic ban on evictions and rent increases, and legislation to limit the rate banks can charge for mortgages. Those policies have struck a chord. The most recent Irish Times Ipsos MRBI poll, in June, showed Sinn Fein leading all other parties, with 21% of respondents citing house prices as the issue most likely to influence their vote in the next general election, the same proportion that cited the economy. Only health care trumped housing as a concern. Other parties are taking note. On Sept. 2, the coalition launched a housing plan as the pillar of its agenda for this parliamentary term, committing over 4 billion euros ($4.7 billion) a year to increase supply, the highest-ever level of government investment in social and affordable housing. Whether it’s enough to blunt Sinn Fein’s popularity remains to be seen. North of the border, meanwhile, Sinn Fein holds a consistent poll lead ahead of elections to the Northern Ireland Assembly due by May, putting it on course to nominate the region’s First Minister for the first time since the legislature was established as part of the Good Friday peace agreement of 1998. For all the many hurdles that remain to reunification, Sinn Fein is arguably closer than it has ever been to achieving its founding goal by championing efforts to widen access to housing. As Kerrane says: “Few, if any households aren’t affected in some way by the housing crisis.” —Morwenna Coniam —With assistance by Philip Heijmans, Malcolm Scott, Olivia Konotey-Ahulu, Nasreen Seria, Aggi Cantrill, Lulu Yilun Chen, Adam Blenford and Patricia Suzara
It's easy to look at offshore buyers as the enemy driving up the price of real estate, but it's essentially the same argument as "foreigners are taking our jobs." Somewhat true, but it does not get to the heart of the matter. What you have to understand is that the political elite and the billionaires in most of the developed world who currently already own most of the real estate have a vetted interest in keeping prices ever higher. This is why it doesn't seem to matter who is in charge--liberals, conservative or even the socialist types in the Netherlands. I don't blame the wealthy from China/Russia/Middle East etc in driving up real estate prices in NYC where I live. I blame the wealthy elite Americans who are encouraging this while minimizing their own roles in this mess. It's the reason why our oligarchical media and tech companies push divisive cultural issues while the top 0.1% capture all of the wealth. Remember Occupy Wall St? Is it a coincidence race relations markedly deteriorated in the years after? Was it due to problems that didn't exist in prior years or was it due to propaganda by the large media and tech companies who got the call from their billionaire shareholders?
I'm both puzzled by and suspicious of this property crunch experienced in so many countries around the world, and growing for the last 10 years (?). While wealthy foreigners are frequently blamed, and may have a part in some pockets of the world, like Vancouver, where Chinese from Hong Kong and the mainland bought properties at inflated prices and are now blamed for the high cost of living (funny how the buyer, not the seller, is blamed), these cases are too anecdotal to explain what seems to be a global trend and crisis. I would like to think that the wealth created by the stock markets and various branches of the tech industry have raised the % of middle and upwards classes to impact property prices the world over. Property buying habits have changed. Rather than buying a home to live in for 30 years or so, real estate is flipped every other or 3rd year to other like minded individuals who then perpetuate that upwards spiraling cycle leading to unaffordability for young buyers and the working class to enter what has become a speculative market. As an anecdotal example, we bought a property in the Bay Area hills in 2009 which we sold in 2019. In a hood of about 50 houses, the avg price was $700k. Within 5 years, a house sold for what was an unbelievable $1M. By the time we sold, about 80% of the houses had flipped at least once, and all were selling around $1.5M. Today's attention span is not only shortened with media consumption, but we live in our property for much shorter times and switch jobs every 2 to 4 years. That acceleration is entirely speculative for more, faster money, impacting property value from a much broader segment of the population than "foreign invasion". The good news is, middle-class purchasing power is increasing. The bad news is, everyone's below is decreasing. When half of the population sees no chance of ever attaining the standards of living being dangled by the media and when so much of youth media is "new rich, bling bling, you losers mofos!"... I see a future with far more social upheaval, far more police repression and a far deeper political divide than we are used to today. That alone is frightening.
Very recently a rental house in our neighbourhood was sold and previous tenants told to get out. The new owner placed it back on the market immediately the same week of change of ownership without doing a smidgen of renovation for a rent increase of 53%. So there is this unregulated market where any person can buy a house as a business and charge whatever they like in rent. It's a cowboy market, housing, I'm sure a supermarket can't charge whatever the market will pay, ie whack up exhorbitant prices willy nilly when they like.
I'm sorry but I'm a strong believer in supply and demand. If you try to influence that very basic exchange with regulation, you screw it up. If Joe wants to sell for $1M and Jack is willing to pay, then so it is. Jack may not give two shits about spending $1M for what's worth half that, because Jack could have lost a lot more in his country of origin, or Jack just wants a place to call home and doesn't want to bid for price. In the end, supply and demand is the truest indicator of value.