The Auckland housing market can’t crash? Bollocks it can’t

Vancouverites upset about being priced out of the housing market because of rising real estate prices fueled by foreign investors, are likely to be heard as the apparent bubble has just burst.

Greater Vancouver home sales have fallen 85% in the first half of August to a mere 87, down from 597 homes over the same time last year.

Meanwhile, Richmond was down 96%, Vancouver West down 94% and the North Shore’s West Vancouver down 90%.

Panic selling has started.  Panic induced bargain buying is still a long way off.

Although the Johnny come lately are still listing homes to cash in on the capital gains, the buyers have dried up, thanks in part to the 15% tax the B.C. government introduced on property transfer’s for foreign nationals buying real estate.

The descent in housing sales is being perpetuated by China’s State regulated media which is warning Chinese buyers of the dangers of owning Canadian real estate.

And if you think our government wouldn’t introduce such a dampening measure on foreign sales, you need to have a good look at both Labour and NZ First policies.

Even with a National-led government, if it includes NZ First, this may be one of the pragmatic compromises that will wipe hundreds of thousands off people’s equity.

Labour, of course, will do it without blinking.   Stuff the rich pricks.

Jared Dillian, former Lehman Brothers trader and noted financial writer, says that the real estate market is near the peak of a massive bubble.

Dillian says that a long, drawn-out “death by a thousand cuts” scenario is in the cards for the Canadian housing market. And, this economic pain will probably last for years.

He also notes that nearly all mortgages in Canada are “recourse mortgages” (except in Alberta). This means in-the-hole homeowners are not as likely to walk away as they were in the US housing crisis.

Dillian states that more interest rate cuts by the Bank of Canada could be in the cards. With the prime rate in Canada at 0.5% right now, it’s not far to zero. In fact, he wouldn’t be surprised to see negative rates by the second half of 2017.

He goes as far to suggest selling any real estate assets in Canada you have, including your home, because you’ll be able to buy that same property back cheaper in three to five years.

Similar adjustments to the market have been seen in Europe, where even 10 years later, prices haven’t recovered to their previous high.

 

Canadian Investor


Do you want:

  • Ad-free access?
  • Access to our very popular daily crossword?
  • Access to daily sudoku?
  • Access to Incite Politics magazine articles?
  • Access to podcasts?
  • Access to political polls?

Our subscribers’ financial support is the reason why we have been able to offer our latest service; Audio blogs. 

Click Here  to support us and watch the number of services grow.

52%