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The Not So Fun And Games Of Dealing With Cheeky Buyers

A report from the Star Phoenix in Canada. “When he listed his upscale Willowgrove condominium for sale last month, Chuck Edwards knew it might take awhile to sell — and that he would almost certainly lose money when it did. Edwards, an engineer in the mining sector, bought the condo two years ago but now wants to sell in order to buy a ‘cute’ older house with a garden, which he misses having.”

“The two-bedroom unit is currently listed for $295,000, but Edwards — who said he has received one offer to date — expects it to sell for less than that, likely between $280,000 and $290,000. ‘The fact that I will almost certainly get less for it than I paid is disappointing, but it’s not going to materially affect me. But if I were 30 or 35 and had a growing family, it might be a real problem,’ he said.”

The Global Property Guide on Switzerland. “After about 15 years of uninterrupted house price rises, the Swiss government’s efforts to cool Switzerland’s overheated property market have finally succeeded. House prices dropped 2.61% y-o-y in Q3 2018, its fifth consecutive quarter of annual declines.”

“A surplus of close to 9,000 rented residential properties is expected this year, according to Wüest and Partner. Rental yields are lowish, at around 3.27%. Zurich apartments are expensive, at around €11,467 per sq. m.”

From The National on Dubai. “Q: We urgently need to sell our villa in the Springs as my husband has lost his job and we are moving home to South Africa. We are being offered some ridiculously low prices by potential buyers. I know it’s a buyers’ market but 30 per cent below is crazy. Any advice for getting the best possible price? RI, Dubai.”

“A: We have been experiencing a sustained buyer’s market and with this comes the not so fun and games of dealing with cheeky buyers. Unfortunately, I cannot shield you from these low ball offers but what I would advise is to follow the steps below to help maximise your chances of getting a good price.”

The South China Morning Post on Hong Kong. “Sun Hung Kai Properties, Hong Kong’s biggest home developer, sold all of its flats on offer at Ma Tau Kok over the weekend, after discounting prices by 50 per cent on average, compared with a similar project in the same neighbourhood.”

“The weekend sale shows how Hong Kong developers have had to slash prices to clear their inventory, taking the cue from a government programme to lower the cost of living in the world’s most expensive urban centre. Declining prices are evidence that the housing bull market has ended, where a 28-month spiral in house prices ended in August.”

From Xinhua on Brunei. “More stringent requirements for bank loans and lack of demand are bringing down prices of residential properties in Brunei, said players in the industry. A contractor who opted for anonymity said the Brunei property market is currently facing a downward spiral from a glut in properties.”

“‘Right now there is an oversupply in residential homes, apartments and commercial spaces, hence the drop in property prices on new developments,’ he said.”

The Sydney Morning Herald in Australia. “I’m sorry, run that by me again? We don’t require engineers to be licensed, qualified or registered? So the hundreds of shonky-looking resi-towers newly metastasising across our city don’t just look like slums-in-waiting but may have no structural or fire integrity to speak of because anyone, including my great aunt Cecily’s dog Tozer, can sign their engineering certificates. Seriously?”

“Tuesday’s interim report on the twice-evacuated Opal tower, by engineering professors Hoffman, Cart and Foster, tells us the building is structurally sound, in that it (probably) won’t fall down, but has major damage. Two causes are pinpointed: faulty design, using lower-than-required safety factors, and poor construction, deviating from both design and good practice.”

“But what’s fascinating about this appalling concatenation of errors and deceits is the degree to which it is systemic. We don’t know how widespread building disasters are because no-one is collecting data, but as the UNSW City Futures Research Institute recently wrote, our ‘system allowing defective apartment buildings’ creates huge social and economic risks for the new compact city.”

“Look around. Anyone with half an architectural eye can see defects everywhere – roof, window, balustrade and wall-capping details that invite water entry; structural sizings that are self-evidently inadequate; stuck-on plastic claddings. Such defects are often ‘latent’ – which is to say they may not present for years and may take further years to diagnose.”

“Even so, your chances of legal remedy are remote. The 2014 High Court finding in the case of Brookfield Multiplex v Owners Corporation Strata Plan followed serious defects in a Chatswood resi-tower. The High Court found that, even with a building rendered uninhabitable, the developer-builder owed no duty of care to purchasers, who apparently should have been able to negotiate protections into their original contract. This, combined with the excruciating cost of litigation, helps explain why so few such cases go to court and why, although it’s manifestly unfair, most owners end up footing ongoing rectification costs themselves.”

“But by far the scariest of this week’s Opal revelations is the fact that – excepting Queensland – Australia’s engineers are entirely unregulated. Engineers Australia is the professional body. ‘Anyone can claim to be an engineer, provide engineering services and use it in their marketing without any regulation,’ its website says. The only register is voluntary. If EA strikes someone off for shonky practice, they can self-resurrect the next day, no questions asked.”

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This Post Has 22 Comments

  1. ‘discounting prices by 50 per cent on average, compared with a similar project in the same neighbourhood’

    And minting dozens of FB’s in the process. Happening in Manhattan, Dallas and Orange County right now.

  3. ‘We are being offered some ridiculously low prices by potential buyers. I know it’s a buyers’ market but 30 per cent below is crazy’

    It’s hard to have sympathy for anyone who bought airboxes in Dubai. They had a massive crash last decade, then jumped right back into building like crazy. Then the oil downturn hit in 2014 and – they kept on building like crazy. They still have tens of thousands of units on the way.

  4. The High Court found that, even with a building rendered uninhabitable, the developer-builder owed no duty of care to purchasers, who apparently should have been able to negotiate protections into their original contract.

    And there you have it. In a time of universal fraud, it’s up to buyers to do their own due diligence. Policymakers, regulators, enforcers, and the media are all up to their eyeballs in perpetrating this systemic fraud.

    1. “And there you have it. In a time of universal fraud, it’s up to buyers to do their own due diligence.”

      Bahahahaha … good luck with that. In our current era of mass ignorance performing “due diligence” is defined as putting down the cell phone (gasp!) for over two minutes and listening very intently and very closely (another gasp!) to what a realtor (OMG, a licensed professional!) wants you hear and wants you to believe.

      “Policymakers, regulators, enforcers, and the media are all up to their eyeballs in perpetrating this systemic fraud.”

      You use what works.

      1. Roh roh…

        Analysts polled by Reuters expect the world’s second-largest economy to have grown 6.4 percent in the October-December quarter from a year earlier, slowing from the previous quarter’s 6.5 percent pace and matching levels last seen in early 2009 during the global financial crisis.

  6. “the Swiss government’s efforts to cool Switzerland’s overheated property market have finally succeeded.”

    “Hong Kong… taking the cue from a government programme to lower the cost of living in the world’s most expensive urban centre”

    Interesting. As Ben has been saying, some governments have been trying to pop the bubble. Is this going to be the new line, taking credit for the bust and claiming they are helping affordability?

    If so, it doesn’t bode well for FBs who have been actively thrown under the bus. Now gov’ts seem to be signaling that people who overpaid will no longer receive much sympathy either.

    None of the above seems to indicate more QE to come.

    1. Any indications of at what point the U.S. will get on board with measures to cool housing prices?

  8. I found these two links aside each other this morning:

    Jeff Saut: Listen to the message of the market
    Tampa Bay Business Journal-Jan 18, 2019
    A housing glut doesn’t exist. Excessive bank leverage doesn’t exist. None of the things exist. We don’t see any excesses in the economy, except for perhaps the …

    Southern California builders are cutting prices to move glut of unsold…
    San Bernardino County Sun-Jan 17, 2019
    Southern California builders are cutting prices to move glut of unsold homes …. For example, housing tracker CoreLogic found 1,695 new homes sold in …

  11. “And by the way, clean up the streets in San Francisco, they are disgusting!” — Donald Trump on Twitter, 1/20/2019

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