Reuters reports that Greeks and Spaniards trying to escape economic and currency woes in their native countries are running to London in increasing numbers. The wealthier of these immigrants are snapping up property in London in attempt to protect their assets. The (average?) price for prime central London properties has increased by 44% over the last three years. Prices in London as a whole have increased at half that rate.
For more details and stories from specific immigrants see “Euro zone turmoil boosts London property stampede.”
In “Homes: Chinese Buyers Make Vancouver Pricier Than NYC“, Bloomberg provides a startling and illuminating account of the dynamics in Vancouver’s over-heated real estate market. The statistics are absolutely astounding. Here is a sample:
“Sales of detached homes, townhouses and condominiums in metropolitan Vancouver jumped 70 percent in February from January, to 3,097 units from 1,819, and were up 25 percent from a year earlier, according to the Real Estate Board of Greater Vancouver. In March, sales climbed 32 percent from February, to just shy of a record for the month of 4,371 transactions set in 2004. Sales increased by 80 percent from two years ago.”
“In 2010, Vancouver had the third-highest housing costs among English-speaking cities worldwide, according to Canada’s Frontier Centre for Public Policy. Only Hong Kong and Sydney, another magnet of Asian immigration, were more expensive. Vancouver’s median home price of C$602,000 ($618,000) was 9.5 times the annual median household income of C$63,100, the group said in a study released Jan. 24. Canada had a 4.6 national multiple, making it ‘seriously unaffordable,’ while the U.S. at 3.3 was ‘moderately unaffordable,’ the study showed. To be affordable, the multiple must be 3 or less.”
The rest of the article explains how buyers from China are helping to drive prices in Vancouver as they escape property restrictions back home. Given three waves of Chinese buyers have descended upon Vancouver since 1990, market participants must feel like everything is normal. As an outsider, this market seems to have all the classic markers of a bubble. As long as the money keeps flowing, the market will remain inflated…
The Financial Times is reporting that investment interest is pouring into residential real estate in the United Kingdom and putting upward pressure on prices. The push is particularly strong in London which is attracting 71% of the 7.5B pounds targeting residential real estate. This adds up to pre-recession levels of investment activity in the London market. For more, see “Interest soaring in London land.”
As of May 10, China will increase the reserve ratio requirement for banks 50 basis points. Currently, the biggest banks must maintain a 16.5% reserve ratio while smaller banks must maintain 14.5%.
Bloomberg reports that this third increase for the year may still prove inadequate to tame China’s inflation threat. Chinese officials continue to reassure markets that monetary tightening targets rampant speculation in real estate and that policy remains accommodative for the rest of the economy.