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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: TobagoJack who wrote (93963)	8/28/2012 5:04:45 AM
From: Haim R. Branisteanu	Respond to of 218649

:o)

To: TobagoJack who wrote (93963)	8/28/2012 5:33:58 AM
From: Haim R. Branisteanu	Respond to of 218649

Asia Macro: Forever blowing (housing) bubbles? 28-Aug-2012 Managing property bubbles has become an integral part of monetary policy in recent years as the excesses of extremely easy money over the last few years come home to roost. Here's a brief look at how a few Asian central banks are tackling the issue and to what degree of success. China Perhaps the most heavy-handed and overt measures to deflate the property bubble, the Chinese central bank introduced restrictive curbs on home lending (banks), buying of second/third investment homes and increasing down-payments (consumers) and a mandate to build affordable housing rather than high-end properties (developers). These measures were all implemented since mid-2010. The measures appear to have had the desired impact, so far. Beijing prices peaked in April 2011 and have been falling steadily since with latest data showing a 0.7% decline y/y. Those in Shanghai peaked in September 2011 and are currently falling at 1.5% y/y. But in the broader picture, authorities will not be so enthused by the data. Latest data from the National Bureau of Statistics show July prices increasing in 49 of the 70 cities surveyed compared with just 25 in June as two interest rate cuts filter through into the economy. In addition there is a great disparity across China's cities making a national policy more difficult to calibrate and implement. For example, Xining (capital of China's western Quinghai province close to Tibet) has continued to see strong property investment in the first half of 2012, pushing prices 33% higher during the period. This example suggests that the central bank's hands may be tied when it comes to considering additional rate cuts. Singapore Perhaps less-excessive but still with a dramatic impact on Singapore's citizens has been the house price situation in Singapore. Often seen as a safe-haven target for investment/hot funds in the region, Singapore saw residential property prices surging dramatically resulting in a number of restrictive property measures for the private housing sector introduced over the past 18 months (additional stamp duty fees for foreign buyers, capital gains taxes on short-term investments and increased quantum down-payments for investment properties. The public, affordable-housing sector is already heavily controlled. The result of the measures has been the desired cooling off in both transactions and pricing. Private property prices are rising at the slowest annual pace since end-2009 (according to the Urban Redevelopment Authority's all residential property price index) while the number of transactions in Q2 2012 was 25% lower than the recent peak in Q3 2009. Australia Australian house prices have witnessed a few bubbles in recent years. Between 1995 -2004, house prices rose 124% (as measured by the Australian house price index) resulting in a verbal cooling effort from the central bank. In the 2006-2010 period, the increase was 44%, less severe but still solid by global standards. Concerns about Australia's housing bubble seem to be more exaggerated outside of the country than internally. RBA's Stevens recently commented "It has to be said that the housing market bubble, if that's what it is, seems to be taking quite a long time to pop - if that's what it is going to do" - certainly no sounds of panic there. Three years after the global financial crisis hammered the US and UK, Australia's house prices are just 5% below lifetime highs and still have a banking system that is able and willing to lend. Mortgage debt now stands at A$1.2 trillion, just shy of the country's A$1.4 trillion annual GDP, but mortgage arrears only total a meager 0.3 percent of all loans, similar to where it was in 1995. Surprisingly, only 35% of Australians have a mortgage and this was reflected in the" insulated" impact of the sub-prime debt crisis on the local banking system and economy. Summary Overall, each of the featured central bank is noting differing degrees of success in controlling (slowly deflating) housing bubbles but all are heading in the right direction. Differing levels of concern are also evident with each market having its own peculiarities. It's still a work in progress for all. Author Andrew Robinson, FX Analyst, Saxo Capital Markets Pte Ltd