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Why property prices are rising

Hopes rise for light in real estate fortunes

by vir.com.vn Leave a Comment

Hopes rise for light in real estate fortunes
Photo: Le Toan

At an event held in the southern province of Ba Ria-Vung Tau on September 11, Minister of Construction Nguyen Thanh Nghi insisted that the real estate market would gradually warm up in the last months of this year and resume development again in 2024.

“Moves to resolve problems for real estate projects are beginning to have positive results and hundreds of delayed projects have been resolved to ensure supply and promote the market,” Nghi said.

According to Barry Weisblatt, director of Analysis of VNDirect Securities, although liquidity risks in the real estate market remain high, the most difficult period has passed. Liquidity coefficients slightly improved in Q2 and Q3.

“In comparison with 2011-2013 when the real estate market was in a downturn, current real estate businesses have much better financial health with the lower leverage ratio. The quick payment ratio of businesses in the current period is also healthier and the ability to pay interest is better,” Weisblatt said.

In recent months, with the participation and support of the government and management agencies, many businesses have proactively bought back corporate bonds worth VND12.5 trillion ($523 million) ahead of maturity, helping the bond value to mature and easing the status of real estate businesses that are having difficulty with cash flow.

The pressure on interest costs of real estate development businesses has also been somewhat cooled by loosening monetary policy.

However, according to Weisblatt, the actual average lending interest rate for the real estate sector is still high at 13-14 per cent a year. “I expect that the real estate market will gradually heat up again when home loan interest rates decrease to 10-11 per cent,” he added.

The liquidity of real estate businesses is still a worrying issue as many businesses are still slow to pay interest and principals on bonds due to difficulties in refinancing channels, along with a sharp decline in sales due to market psychology.

Meanwhile, the Law on Land is being implemented on schedule and is set to take effect in the second half of 2024, marking a major turning point for the real estate sector when bottlenecks are resolved in approving new residential projects, helping the housing supply gradually recover towards 2025.

In addition, the socioeconomic situation has changed positively in recent months. The State Bank of Vietnam has reduced operating interest rates four times, with a total reduction of 0.5-2 per cent per year. Market interest rates are decreasing, bringing real estate businesses easier access to capital, so people may gradually turn their interest to real estate investment channels.

Over the past few months, a number of projects across the country have made preparations for offerings and sales, and trading centres are also preparing to operate again after many months of closure.

For example, transaction centre OneHousing has been continuously holding recruitment events to expand its professional brokerage staff. This company estimates to increase its brokerage force to reach 1,000 sales by the end of 2023. Its target is to reach up to 10,000 sales nationwide in 2024.

Meanwhile, many developers have also confidently planned or launched sales, and at the same time, implemented a series of stimulus programmes such as increasing discounts, extending payment schedules, and supporting interest rates for home buyers.

For example, Masteri Waterfront, Zenpark, and The Zurich have applied a zero interest rate support policy for 2-8 years to support customers’ financial situation. Ecopark offers a 10 per cent discount for customers who buy at Eco Village Saigon River when paying for 95 per cent of the house value, or supporting bank loan interest rates and principal debt grace for 30 months.

In addition, the market has also recognised aggressiveness in implementing the sales policies of many investors.

A OneMount survey notes that in the second quarter of 2023, about 30 per cent of projects increased incentive policies with the value of gifts equivalent to 7.7 per cent of the selling price. After applying this sales policy, the consumption of these projects increased by 67 per cent compared to the previous quarter.

New open supply in the second quarter also increased by over 150 per cent, while consumption was about 15 per cent higher compared to the previous quarter, the survey indicated.

By Bich Ngoc

Mapped: The least energy-efficient homes in Britain as bills set to rise

by www.express.co.uk Leave a Comment

Sunak compares UK’s climate change record to other countries

The UK has some of the oldest, and consequently least homes in Europe. Improving this situation had long been a cornerstone of the Government’s Net Zero drive.

Last Wednesday, in claiming Britain was “so far ahead of every other country in the world” that it could afford to make slower, less costly progress towards the 2050 target, Rishi Sunak scaled back a range of green policies.

Alongside delays to the sales ban on new petrol and diesel cars and legal requirements to transition from gas boilers to heat pumps, the Prime Minister scrapped plans to force landlords to make energy efficiency upgrades to their properties.

As the first autumn chills set in, households up and down the country fear a repeat of last winter’s astronomical costs, with .

Some areas are far better braced for the cold than others, however, as research by PlumbingNav reveals the worst-insulated neighbourhoods in the country.

The study, using the latest local-level Energy Performance Certificate (EPC) ratings compiled by the Office for National Statistics (ONS) , looked at the percentage of homes in each area with a C grade or above – considered the benchmark for good energy efficiency.

The Isles of Scilly, 28 miles southwest of the Cornish peninsula, fared worst of all, with just 14.1 percent of homes achieving at least a C rating.

This is almost 30 points below the England and Wales average of 42.4 percent, and over 60 points under the rate in Tower Hamlets, the most energy-efficient local authority in the country (76.1 percent).

Pendle in Lancashire came second, with just 21.8 percent of homes considered adequately energy efficient. The borough was followed by Gwynedd in the northwest of Wales (23.7 percent), Castle Point in Essex (24.8 percent) and Burnley, Lancashire (25.1 percent).

Worst energy efficiency areas

Where energy bills are likely to soar most this winter… (Image: Express)

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A spokesperson for PlumbingNav said: “It is striking to see the disparity in energy efficiency ratings across the UK. A poor energy efficiency rating is one of the biggest drivers in household energy bills, at a time where few can afford increased costs.”

From October, Ofgem’s energy price cap – based on a typical household’s annual usage under a fixed unit cost for gas and electricity – will fall by £151 to £1,923, the first time it has dipped below £2,000 in 18 months.

The spokesperson added: “Despite the energy price cap reduction, the cost of heating still remains cripplingly high for many, and Citizens Advice Bureau has revealed that millions of households will pay more for their energy bills than last year, due to the cost-of-living crisis leaving them with less money for household bills, and because Government subsidies have been removed.

“Homes with poor energy efficiency are likely to suffer from the highest bills this winter, and residents may find it useful to see if they qualify for a Winter Fuel Payment or other energy support.”

China Places Chairman of Tottering Evergrande Property Giant Under Police Surveillance

by www.breitbart.com Leave a Comment

The Chinese Communist Party has reportedly placed Hui Ka Yan, the billionaire chairman and founder of China’s gigantic and dangerously indebted Evergrande Group, under police surveillance, reports indicated Wednesday.

This development is unlikely to boost investor confidence in the tottering property company, whose collapse could have severe repercussions for the Chinese economy, and aftershocks felt around the world.

Bloomberg News broke the story Wednesday, reporting that Hui was “placed under police control” this month. His status is delicately referred to as “residential surveillance” by Chinese officials, but it sounds as though Hui has been straight-up detained. He is not under house arrest, but has instead been taken to a “designated location” and his travel documents have been confiscated.

“The measure means he is unable to leave the location, meet or communicate with others without approval, based on China’s Criminal Procedure Law,” Bloomberg explained.

“A person close to Evergrande said Hui had stopped contacting staff over the past few days, while an industry source said he had become totally inaccessible,” Reuters said Wednesday.

The only practical differences between Hui’s status and imprisonment are that his “designated location” is more comfortable than a prison cell, and “residential surveillance” is not supposed to last more than six months.

Bloomberg said the reasons for Hui’s detention were unclear, which is not surprising, since one of the perks of authoritarian tyranny is being able to throw people in jail without explaining why. China has also reportedly detained other Evergrande staff and executives as part of the investigation into the company’s wobbly finances, possibly because Beijing wants to send the message that no company is “too big to fail,” but remains nervous about demolishing Evergrande.

Hui, 64, was considered the richest man in Asia at the peak of Evergrande’s wealth in 2017. His net worth remains well over $3 billion. He started out as a humble steel factory technician from a rural village in the 1980s before founding Evergrande in 1996, becoming the sort of self-made tycoon China celebrates as a symbol of its booming markets, especially since he had a penchant for making investments that agreed with dictator Xi Jinping’s priorities.

“Without the country’s policy to reform higher education, I could not have left the village. Without the country giving me a scholarship of 14 yuan every month, I could not have completed university. Without the country’s good policy to reform and open up, Evergrande would not have what it has today,” Hui said at an awards ceremony in 2018.

“Therefore, everything that Evergrande and I have, they are all given by the Party, by the country, and by society,” he gushed.

As recently as July 2021, he was an honored guest at the hundredth anniversary of the Chinese Communist Party’s founding.

Hui fueled Evergrande’s rapid expansion into China’s dominant real-estate company by taking on staggering amounts of debt, which became a major problem when the bottom fell out of the once-booming property market. Hui’s strategy involved racking up debt to buy property and then selling it quickly at bargain prices, a moneymaking machine that abruptly seized up when regulators began cracking down on heavy debt loads, and even the discounted prices became too high for Chinese consumers.

Evergrande’s liabilities stand at over $300 billion, and the company is having a great deal of trouble restructuring its debts, in part due to ongoing government investigations. On Friday, the company canceled meetings with its creditors because Chinese regulators blocked its plan to issue new bonds against its remaining assets to cover its debt payments.

Evergrande shares plunged 25 percent on Monday after the company missed a bond payment, dragging Chinese property stocks to a nine-month low. SPI Asset Management managing partner Stephen Innes said on Wednesday the tumble “reignited concerns that the country’s housing sector is still deteriorating rather than showing signs of improvement and that financial stability risks are rising.”

A group of Evergrande’s biggest bondholders plans to meet in Hong Kong at the end of October to push a liquidation petition. If the Hong Kong court grants that request, which seems likely unless Evergrande comes up with a workable debt restructuring plan, the collapse of the company will become all but inevitable, as EuroNews explained Wednesday:

Government intervention to support Evergrande and provide immediate liquidity is unlikely. While liquidation remains a possibility, it could be the worst-case scenario for Evergrande, as the company would cease to exist and its debt would be written down to zero, with far-reaching implications for its lenders.

In such a scenario, offshore bondholders would retain the ability to pursue claims against the company’s executives, officers, and offshore assets, offering them some avenue to recover a portion of their lost investment.

This raises the possibility that China detained Hui, without actually pressing charges and tossing him in prison, to reassure angry investors that he will not disappear, and they can still file claims against his personal fortune.

It was advertised as a delightful ground-floor apartment. Within a day, the rental price had gone up twice

by www.abc.net.au Leave a Comment

The one-bedroom apartment in St Kilda in Melbourne was advertised as a delightful ground-floor apartment with its own private courtyard and abundant natural light.

Interested renters had begun registering to inspect the property when the real estate agency informed them by email that the asking price had been raised to $425.

The ABC understands it was initially listed at about $390 per week.

Later the same day in late August, a second email went out, advising the asking price had risen again to $450.

According to the message, the change was made at the request of the owner “due to a greater than anticipated market demand”.

In almost all Australian jurisdictions, rent bidding — where tenants are invited to offer a higher price than the one advertised — is banned, and rent must be advertised at a fixed price rather than a range.

However, real estate groups say this specific practice is lawful, with the Real Estate Institute of Victoria (REIV) saying rental providers can increase or decrease advertised prices based on market conditions prior to a lease being signed.

Rental advocacy organisations, on the other hand, have slammed it as an unfair practice that exposes a weakness in tenancy laws and prices people out of a competitive rental market.

The adjustments pushed the unit well beyond the budget of one prospective tenant the ABC spoke with, who did not wish to be identified.

Landlords can adjust prices of rental properties

The real estate agency letting the property, Areal, said ensuring tenant longevity was a key factor of its considerations when it came to asking prices.

“We work with a holistic viewpoint, and it’s this perspective in which we provide our clients advice, and it’s these little differences such as keeping rental increases after a fixed term to a minimum that makes a huge difference to our clients,” a spokesperson said in a statement.

“However, the reality is that any landlord can adjust the pricing of their rental property — up or down, at any time before it is leased.”

The real estate agency emphasised the price was changed before inspections were held.

Advocates say practice shows ‘gaps’ in existing laws

Asked about the practice, Consumer Affairs Victoria said rental providers generally must take care “not to engage in behaviour that could be deemed as soliciting or inviting higher offers of rent”.

Neither CAV nor the REIV responded to questions about how common the practice is.

According to Better Renting, a community organisation of renters advocating for better rights, it shows “gaps” in existing tenancy laws.

“In so many other markets … we wouldn’t accept this kind of behaviour,” the organisation’s executive director Joel Dignam said.

Renters in cities across Australia have had to contend with rising rents and slim vacancy rates in recent months, and PropTrack data from July recorded the cost of rent in Melbourne rising twice as fast as the national average .

An Areal spokesperson said rising interest rates and inflation were driving more people to rent instead of buy, pushing up demand, while landlords had to cover increasing property ownership costs.

“All of these factors are working together in a ‘perfect storm’ to effectively drive prices up, and due to the volatility of the market, changes are happening almost overnight,” they said.

Mr Dignam said it was, in one sense, “perfectly normal behaviour” to adjust a price based on market demand, but special consideration should be given to housing.

“When you put the price up like that, a whole bunch of people are missing out on a chance to have that home, and who knows where they’re going to be ending up,” he said.

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Wall Street crash is here with stock markets ‘on the edge’. So is UK next to fall?

by www.express.co.uk Leave a Comment

Victoria Scholar, head of investment at Interactive Investor, issues inflation and interest rate warning

History shows that September is the worst month of the year for stock markets and here we go again as US markets have fallen for three weeks in a row. Analysts are warning there is worse to come as share prices could plunge 50 percent in total , smashing global wealth.

Yesterday, the Dow Jones index plunged by nearly 400 points in its worst day since March. The S&P 500 fell by 1.47 percent while the tech heavy Nasdaq beat that and is down almost seven percent this month alone.

It’s a bloodbath out there, as the US faces a heap of economic worries.

New home sales fell by 8.7 percent in August, according to the Commerce Department, while the Conference Board reports that consumer confidence expectations have fallen to recession levels.

The big worry is that the US Federal Reserve will have to carry on hiking interest rates as it battles to curb inflation.

While the Fed kept rates steady at 5.5 percent in September this was described as a “hawkish hold” after chair Jay Powell warned of more hikes to come

Top US banker JPMorgan CEO Jamie Dimon has warned interest rates could hit seven percent which would hammer markets and trigger a massive global recession .

At the same time, bonds are yielding income of as much as six percent a year, the highest since 2007, giving investors a decent return without the risk of investing in equities.

Sam Stovall, chief investment strategist at CFRA research said: “Investors are still on edge, nervous, about what rising bond yields have to say about the economy, about the stock market, about the Fed.”

Wall-Street-crash

September is a notoriously bloody month for stock markets (Image: Getty)

The Fed’s “higher interest rates for longer” rhetoric is persuading investors to dump high-risk assets like shares, said Chris Beauchamp, chief market analyst at trading platform IG. “September’s reputation as one of the worst months for stocks has been bolstered.”

Appetite for risk among investors keeps decreasing everywhere due to lingering inflation, said Pierre Veyret, technical analyst at ActivTrades.

Many are also spooked by the prospect of a US government shutdown after Congress failed to pass a short-term spending bill, Veyret added. “This would further dent confidence in the nation’s credit rating and economic outlook.”

Investors are also worried about China after the country’s embattled property giant Evergrande defaulted on a £450m debt repayment, casting a shadow over the world’s second-biggest economy. “Dark clouds continue to pile up for investors,” Veyret said.

So far, the UK has escaped the worst of the carnage. London’s benchmark FTSE 100 index of blue-chip stocks is actually up 2.2 percent so far in September.

It’s even holding steady today. How come?

READ MORE: Stock markets hit ‘puke point’ as high interest rates trigger violent 50% crash

Last week, the Bank of England surprised and delighted investors by holding interest rates at 5.25 percent, while signalling they have reached their peak. That certainly helped.

The FTSE 100 is often seen as a “defensive” index, as it is full of solid old school stocks in the banking, mining, tobacco and insurance sectors.

These are currently paying dividend yields of as much as seven percent or eight percent, giving bond yields a run for their money.

Cynics might say that the FTSE 100 hasn’t risen much lately – in contrast to the US – so it hasn’t got as far to fall.

However, Beauchamp warned that rising US interest rates and the worsening economic outlook is a dangerous cocktail for the FTSE 100, too.

Investors are “jittery” and the pound is on track for its worst month since last autumn’s mini-Budget fiasco , said Victoria Scholar, head of investment at Interactive investor. “This reflects the increased risk of a UK recession as rising borrowing rates weigh on the economy. “

As ever, some brave investors will see today’s struggles as a buying opportunity.

September’s troubles may only be a dip before a year-end stock market rally, said Mathieu Racheter, head of equity strategy research at private bank Julius Baer.

As 2023 draws to a close, investors will look forward to an interest rate cut in 2024. “Since the early 1970s, evidence suggests that equity returns tend to be good following the last rate hike.”

Yet even Racheter urged investors to stick to larger companies and “defensive” stocks to cope with the ongoing turbulence.

Things could get worse before they get better. Much worse. Especially in the US.

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