Trojan Estate http://trojanestate.com/ Thu, 04 Aug 2022 09:36:00 +0000 en-US hourly 1 https://wordpress.org/?v=5.9.3 https://trojanestate.com/wp-content/uploads/2021/04/cropped-icoon-32x32.png Trojan Estate http://trojanestate.com/ 32 32 Scout24 shares rising advice on German real estate demand https://trojanestate.com/scout24-shares-rising-advice-on-german-real-estate-demand/ Thu, 04 Aug 2022 09:36:00 +0000 https://trojanestate.com/scout24-shares-rising-advice-on-german-real-estate-demand/
By Ed Frankl

Shares of Scout24 SE rose on Thursday after raising its forecast for 2022 as German property developments boosted demand on its ImmoScout24 platform.

At 09:30 GMT, the action rose 4.4% to 60.14 euros.

The German digital market raised its revenue growth targets to 13%-15% from the upper limit of the previous forecast of 11%-12% from May.

It also raised its outlook for growth in earnings before interest, tax, depreciation and amortization from ordinary activities to 10%-12%, from the upper limit of between 6% and 8% previously.

The rise in profits was based on improved revenue momentum, a more efficient product and marketing mix as well as additional economies of scale, the Munich-based company said.

Ahead of the August 9 first-half results, the company said revenue growth in the six months to end-June was already up 14.7% year-on-year, with Ebitda growth up 9.5%.

Scout24’s revenue momentum is expected to exceed market expectations as its products have gained traction, allowing it to increasingly monetize its customer base, RBC Capital Markets analysts Wassachon Udomsilpa and Sherri Malek said in a note.

“With the greatest potential for upside revenue surprises, Scout24 is our preferred name in the classifieds space,” they added.

Write to Ed Frankl at edward.frankl@dowjones.com

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Should workers outside London and the South East be paid less? How inflation hits different parts of the country | UK News https://trojanestate.com/should-workers-outside-london-and-the-south-east-be-paid-less-how-inflation-hits-different-parts-of-the-country-uk-news/ Thu, 04 Aug 2022 02:35:03 +0000 https://trojanestate.com/should-workers-outside-london-and-the-south-east-be-paid-less-how-inflation-hits-different-parts-of-the-country-uk-news/

Liz Truss’ proposal was that local councils should set the salaries of government employees based on where they live, which would drive down salaries for civil servants outside wealthy areas like London and the South East.

But the poorest cities in the North, West Midlands and Wales are seeing the biggest reductions in real wages, according to a study by policy institute Center for Cities.

The cost of living is rising faster in Burnley than in any other urban area in England and Wales. Inflation in the Lancashire town is estimated at 11.5% – the highest rate of the 58 urban areas examined by the researchers.

This is significantly higher than London and Cambridge, which have the lowest rate of 8.8%, and the UK average of 9.1%.

Many of the poorest towns and villages are the most squeezed.

This means that the people least able to cope – those with the lowest wages and the most debt – see their standard of living eroded the most.

The findings suggest that workers in these parts of the country need higher wage increases to keep up with rising prices, rather than falling further behind as they would have in the plans announced by Ms Truss.

Experts have warned that to reach the £8.8billion in savings the policy was meant to deliver, the plan would need to diversify beyond ministries, with teachers, nurses and police also facing salaries lower than those of workers in the South.

Team Truss claimed there was a ‘deliberate misrepresentation’ politics, but former Tory whip Mark Harper, who backs Ms Truss’ opponent Rishi Sunak, said they should ‘stop blaming journalists’ for reporting details in his own press release .

Other Sunak supporters said the policy would “kill leveling”, was “a totally bad move” and “a surefire way to lose the next general election”.

The highest inflation for the poorest households

Jack Leslie, senior economist at the Resolution Foundation, says Center for Cities research agrees with their own findings that inflation is 1.6 percentage points higher for the poorest tenth of households than for the most rich.

“The extent of rising cost pressures depends to some extent on families’ spending habits and where they live,” he says.

“With inflation currently driven by increased energy bills and gasoline pricesrural areas with less well-insulated housing stock and less public transport connections experience particularly strong cost pressures.”

Read more: How much is an extra pint in London? How inflation affects different parts of the UK

Many urban areas in the north of England also have poorly insulated houses.

In Burnley, 80% of homes are energy intensive and 15% of spending is on vehicles. Whereas in London, these figures are only 58% and 10%.

High energy bills are a major driver of high inflation in poorer urban areas. This erodes purchasing power because wage increases do not keep up with rising prices.

Does housing drive up inflation?

Besides energy costs, you might think that high house prices and rents are a key driver of inflation in places like London.

Housing costs were not included in the calculations made by the Center for Cities researchers due to a lack of data.

Sky News’ analysis of SpareRoom rental data found that the amount of income spent on rent varies widely. But despite high prices in the capital, rent eats up roughly the same amount of income in Burnley.

Households in Burnley spend 21% of their wages on rent, compared to 22% in London and just 17% in Cambridge.

This does not say it all, as many people own their own homes or live in social housing.

But Valentine Quinio, a senior analyst at the Center for Cities, says that doesn’t change much because housing isn’t the main driver of inflation at the moment.

“Our estimates always paint an accurate picture of the geography of inflation [as] the main driver is energy (and food prices), so it’s looking at how these vary between cities that gives the clearest idea of ​​where the most affected are,” she says.

Government donations help but not enough

The government recently announced £15 billion to help households cope with rising energy costs.

Research from the Center for Cities found that households in the North and Midlands are likely to get more than other parts of the country, but despite this most people still face higher energy costs.

Only 19% of the 58 urban areas studied are better off after the handout. The average Burnley household still faces a £109 increase in annual energy costs.

A spokesperson for the Department for Leveling, Housing and Communities said: “We recognize the challenges households are facing with the cost of living which is why we are providing a £37billion support package which helps millions of people to meet the rising costs of living.

“We are investing a total of £6.6 billion in this parliament to improve energy efficiency across the country, benefiting tens of thousands of homes and saving an average of £300 a year on their utility bills. ‘energy.

“The changes we’ve made to Universal Credit mean that 1.7million households will keep an average of around £1,000 extra a year.”


The Data and forensics The team is a versatile unit dedicated to delivering transparent Sky News journalism. We collect, analyze and visualize data to tell data-driven stories. We combine traditional reporting skills with advanced analysis of satellite imagery, social media and other open source information. Through multimedia storytelling, we aim to better explain the world while showing how our journalism is done.

Why data journalism matters to Sky News

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How Homeowners Are Avoiding Taxes And Fueling The Housing Crisis https://trojanestate.com/how-homeowners-are-avoiding-taxes-and-fueling-the-housing-crisis/ Wed, 03 Aug 2022 09:20:00 +0000 https://trojanestate.com/how-homeowners-are-avoiding-taxes-and-fueling-the-housing-crisis/

Opaque property laws that make it easier for homeowners to avoid paying taxes are worsening a nationwide housing crisis fueled by inflation and a shortage of low- and middle-income housing.

Limited Liability Companies – or LLCs – are a common way for landlords to own the real estate on which they can charge rent. But LLCs often hide the identities of the people who support them, which allows owners to be protected from legal consequences when they don’t pay their property taxes.

Properties can then be subject to tax foreclosure and effectively taken off the market in cities where housing supply is scarce, further driving up prices and forcing tenants to live far from where they work. .

Studies have “linked LLC ownership to real estate divestment, tax forfeiture, even forfeiting properties altogether,” Princeton sociology professor Matthew Desmond told the Senate Banking Committee on Tuesday. , housing and urban affairs.

“One of the landlords I spent time with in Milwaukee, I asked him, ‘What happened to that house that I spent a lot of time with?’ And she said, ‘I just took it back to town.’ And what she meant was she just stopped paying taxes on it and let it go into tax garnishment,” Desmond said.

“Tax foreclosure shouldn’t be part of a business strategy, but for some owners who use LLCs, it is,” he added.

A 2019 study by Harvard Joint Center for Housing Studies fellow Adam Travis linked housing decay and disinvestment to LLCs, which became widely available to landlords in the 1990s.

“Over the past two decades, the advent and spread of the limited liability company (LLC) has reshaped the legal landscape of rental property,” the study found. “Increasingly, rental properties are owned by commercial organizations that limit investor liability, rather than individual landlords who own property in their own name.”

The study found “signs of housing divestment increase as properties shift from sole proprietorship to LLC ownership.”

The share of rental properties held by professional landlords is increasing across the country as rents and mortgage rates are driven higher by increases in Federal Reserve interest rates.

“Professional investors made a record 28.1% of all single-family home purchases in February,” a July report from real estate market data firm CoreLogic showed.

Since the onset of the pandemic in early 2020, the share of home purchases made by investors has doubled from 14% to around 28%, according to data from CoreLogic.

Lawmakers from both sides have noted that there are concerns about the increase in holdings of business owners.

“It comes up repeatedly from witnesses, and my colleagues have pointed to the increase in the percentage of single-family homes, especially those owned by private investors. And there are a lot of people who are very concerned about that,” Sen. Pat Toomey (R-Pa.) said during Tuesday’s hearing.

Sen. Catherine Cortez Masto (D-Nev.) echoed Toomey, saying, “I, too, am concerned about institutional investors and the impact that’s having in Nevada, why we’re seeing all these properties being purchased.”

“I know that in my state in 2021, 29% of homes purchased in the Las Vegas metro area were purchased by investors. And the challenge is that I can’t say how many are institutional. I think it has everything to do with what I heard earlier about too many LLCs and not enough transparency,” she continued.

Across the country, property values ​​have risen rapidly in the wake of the coronavirus pandemic, which has led to a dearth of new construction projects, doubling the pace of inflation. The national Case-Shiller house price index rose nearly 20% from May 2021 to May 2022, while consumer inflation rose 8.6% over the same period.

Home prices have risen about 20% and rents about 12% between 2020 and 2021, according to a joint report on national housing conditions from the Harvard Graduate School of Design and the Kennedy School of Government.

As families are squeezed out of the market by investors, legal mechanisms such as limited liability companies that are favorable to business owners are under intense scrutiny.

“There’s a theme there: out-of-town investors are hiding behind a cloak of anonymity,” Laura Brunner, director of a government-backed real estate development agency in Cincinnati, said Tuesday. to the Senate Banking Committee.

“Last summer, we asked the City of Cincinnati for the names of the five worst landlords,” she said. “It took months of rigorous research to discover that over 4,000 single-family homes in Hamilton County had been purchased by these five owners. Monitoring acquisitions was a daunting task due to the high volume of LLCs used. »

LLCs and similar legal designations, like S corporations, were originally used to encourage entrepreneurship, so people could undertake risky business ventures without risking personal bankruptcy. Today, limited liability companies are more often used as devices to maintain anonymity by wealthy owners, according to experts in the real estate industry.

“I represent the wealthiest people in the world and some of the most famous people in the world, and they won’t buy a property unless it’s in the name of an LLC, sometimes multiple LLCs, and they do. are doing in order to keep that anonymity, so people don’t know who is buying the property,” New York real estate attorney Adam Leitman Bailey said in an interview.

“In a nefarious way, it allows people from different countries to buy property in another country, to buy property in America. Let’s say they’re trying to hide money. They can do it using an LLC, and people won’t know who they are.

Bailey said the practice was common in prestigious cities like New York.

“As a real estate attorney, New York is a phenomenal place. If you have money that you want to make sure it doesn’t get taken away from you in another country where it could be taken away or seized, you can buy an apartment in New York and use it as a safe deposit box, and just buy it in cash as part of an LLC, and only the lawyer and the client will know who owns the LLC. money that way. Real estate moves very slowly and nobody asks questions,” he said.

Housing issues have taken center stage in both chambers of Congress hearings in recent weeks.

The Senate Finance Committee held a hearing in July on the role tax incentives could play in building more affordable housing, and the House Ways and Means Committee recently held a hearing called “Nowhere to Live: Profits, Disinvestment, and the American Housing Crisis.”

The Treasury Department announced new rules last week to fund more affordable home loans as part of the US bailout, and the White House on Tuesday hosted a virtual summit on boosting government housing assistance. emergency and long-term eviction reforms.

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Lentor Modern – home of property developer, offers quality products that stand out. https://trojanestate.com/lentor-modern-home-of-property-developer-offers-quality-products-that-stand-out/ Tue, 02 Aug 2022 18:24:00 +0000 https://trojanestate.com/lentor-modern-home-of-property-developer-offers-quality-products-that-stand-out/

Developed by Guocoland Limited, Lentor Modern is a Singapore-based property developer that offers exceptional quality products for a tranquil environment.

Lentor Central, Singapore, Aug. 02, 2022 (GLOBE NEWSWIRE) — Lentor Modern is a Singapore-based property developer, developed by Guocoland Limited, working for decades and offering exceptional quality products for a tranquil environment. Lentor Modern is a unique mixed-use development nestled in the new Lentor enclave of District 20. The new Lentor Central Condo features approximately 600 residential units spread across 3 25-story towers.

Lentor Modern is located in an exceptional location. As well as being directly connected to the Lentor MRT station which serves the Thomson East Coast line, the Lentor Central mixed development is also close to the Yo Chu Kang MRT if the North-South line is required. Lentor Modern prices appeal to families of all types looking for a peaceful environment. The Lentor Modern Condo is a mixed development which includes luxury residential units and commercial shops on level 1. It is also directly connected to the future Lentor MRT station which serves the new Thomson East Coast line.

Lentor Modern is also fortunate to be close to many renowned schools for the younger generation. Parents living at Lentor Modern Condo are spoiled for choice at nearby local and international schools such as Anderson Elementary School, CHIJ St. Nicholas Girls School, Mayflower Elementary School, Presbyterian High School , Yio Chu Kang Secondary School, Nanyang Polytechnic, among others. The development includes a commercial component on the ground floor where there are approximately 96,000 square feet of retail, commercial and F&B stores. Lentor Modern occupies the most prime terrain in this part of Lentor.

Located just above the new Lentor MRT station, the Lentor Modern condo is directly connected to the station. The plum site was won by Guocoland through Government Land Sales where the bid was won by 4.5% more than the second highest bidder. The land cost of $784.1 million is unprecedented in the region and translates into a land rate of $1,204 per sq.m per plot ratio (PSF PPR). There is also a wide range of shopping options and amenities that can be found in the Ang Mo Kio area. Being one of the most mature areas in Singapore, locals can access many local wet markets, cafes and hawker centers that serve local delicacies. Other malls nearby are Djitsun Mall, Broadway Plaza and Ang Mo Kio Hub,

CONTACT: Email: sales.lentorsmodern.com.sg Phone No: +6561001908
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Live update: Uber turns cash flow positive for the first time https://trojanestate.com/live-update-uber-turns-cash-flow-positive-for-the-first-time/ Tue, 02 Aug 2022 10:51:41 +0000 https://trojanestate.com/live-update-uber-turns-cash-flow-positive-for-the-first-time/

Uber recorded its first-ever positive cash flow quarter, having spent $25 billion since its founding 13 years ago in the rush to expand globally.

The loss-making Silicon Valley group, which has relied on heavily subsidized rides to disrupt the global taxi industry, said it generated free cash flow of $382 million in the three months leading up to the end of June.

That’s significantly higher than the $109 million that analysts had predicted, according to data from S&P Capital IQ. Free cash flow is defined as operating cash flow less capital expenditure.

“This marks a new phase for Uber, which is self-funding its future growth with disciplined capital allocation, while maximizing long-term returns for shareholders,” said Nelson Chai, Uber’s chief financial officer.

Earlier this year, the company said it would limit spending in order to meet the goal of being free cash flow positive by the end of 2022. This included reducing driver incentives and slowing of hiring companies.

The company still posted a quarterly net loss of $2.6 billion, of which $1.7 billion was attributable to underperforming investments, including its shares in standalone Aurora, Singapore-based app Grab and Indian delivery app Zomato.

Chai said Uber’s revenue “would experience fluctuations from quarter to quarter due to the large size of the holdings on our balance sheet.”

“While we intend to monetize some of our holdings when the time is right, we have sufficient liquidity to give us the flexibility to maintain all of these positions, with the goal of maximizing value for Uber and our shareholders.”

The net loss was worse than analysts’ estimates, but Uber’s results comfortably beat analysts’ expectations on other key metrics. Overall revenue was $8.1 billion, up 105% year-over-year. Analysts expected $7.37 billion.

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FHA authority to continue insuring reverse mortgages passes House https://trojanestate.com/fha-authority-to-continue-insuring-reverse-mortgages-passes-house/ Mon, 01 Aug 2022 19:50:35 +0000 https://trojanestate.com/fha-authority-to-continue-insuring-reverse-mortgages-passes-house/

A package of six appropriations bills passed by the House of Representatives late last month included language allowing the Federal Housing Administration (FHA) to continue insuring home equity conversion mortgages (HECM). This is according to an announcement from the National Reverse Mortgage Lenders Association (NRMLA) and the wording of the legislative package as reviewed by RMD.

The package, collectively known as the Transportation, Housing, and Urban Development and Related Agencies (THUD) Appropriation Bill 2023, passed the House of Representatives 220-207, a virtually partisan vote that saw all Democrats vote yes while all Republicans voted. no, except for four members who did not vote according to the official count.

“The Transportation, Housing and Urban Development and Related Agencies Funding Bill for 2023 provides funding of $90.9 billion, an increase of $9.9 billion – more than 12% – from compared to 2022,” reads an announcement from the House Appropriations Committee. “This includes an increase of $8.9 billion for the Department of Housing and Urban Development and $833 million for the Department of Transportation. In total, the bill provides $168.5 billion in total fiscal resources, an increase of $11.5 billion from 2022.”

Late last week, the Senate released its own version of the appropriations bill, which uses the same language relating to the HECM program as its House counterpart, according to the NRMLA in an emailed announcement to members. The NRMLA also said its work played “an essential role” in integrating the language into the package.

Current law governing the HECM program imposes a limit, or “cap,” on the number of HECM loans the FHA can insure. However, this cap has been consistently suspended by Congress since 2007.

Late in the Trump administration, in its final budget proposal, HUD, under Secretary Ben Carson, sought to permanently remove the cap. This recommendation continued in the first budget proposal released by the Biden administration and reappeared in the Congressional rationale document for the budget request released earlier this year.

“This proposal would remove the statutory cap on the number of HECM loans that can be insured by the FHA, which is routinely removed in the 2023 Finance and Appropriation Acts,” it says. As described, this limit has indeed been lifted in the last budget proposal.

Read the announcement of the move to the House Appropriations Committee.

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The economy & us: what an exceptionally busy week taught us https://trojanestate.com/the-economy-us-what-an-exceptionally-busy-week-taught-us/ Mon, 01 Aug 2022 13:38:44 +0000 https://trojanestate.com/the-economy-us-what-an-exceptionally-busy-week-taught-us/

By Nicole Goodkind and Julia Horowitz, CNN Business

If you’re reading this, it means you survived the busiest week of summer. Congratulations.

The last week of July arrived with an overwhelming confluence of economic data, income reports, Federal Reserve announcements and spending agreements in Congress.

The impact of the past seven days will reverberate over the coming weeks. around the abandoned corridors of Wall Street and Washington DC as politicians and investors retreat to the Hamptons or Martha’s Vineyard or wherever they summer.

Are we in a recession? It’s hard to say, but hopefully by September, the insights we’ve gleaned over this perilous week will be fully absorbed and our understanding of the US economy will be clearer.

So what are we working with here? Let’s summarize.

  • The Federal Reserve raised interest rates an additional 75 basis points. The market was expecting this move, but it was still a historically significant rise. The Fed’s actions raised the rate banks charge themselves for overnight borrowing to a range between 2.25% and 2.50%, the highest since December 2018.
  • The main inflation indicators showed that prices remain high. The personal consumption expenditure price index rose 6.8% in June, the largest 12-month rise since January 1982.
  • Consumer spending was higher, which is usually a sign that the economy remains strong. This time, however, the increase is likely due to rising prices and not thickening wallets. Personal consumption expenditure rose 1.1% for the month, above the estimate of 0.9%.
  • The economy contracted for the second consecutive quarter. GDP contracted at an annual rate of 0.9%. This drop marks a key symbolic threshold for the most commonly used – albeit unofficial – definition of a recession as two consecutive quarters of negative economic growth.
  • Americans have become more pessimistic about the economy. The Conference Board’s consumer confidence index fell in July for the third consecutive month. About 43% of the 3,000 people polled said they thought there was a greater than 50% chance that the United States would fall into a recession in the next 12 months, while only 13% said so in april.
  • Home price growth slowed for the second month in a row. Prices in May were still robust, posting a 19.7% increase from the same month last year, according to the S&P CoreLogic Case-Shiller National Home Price Index. But the market is cooling due to rising mortgage rates and concerns about inflation. In April, they increased by 20.6%.
  • Congress passed a $280 billion package to bolster the nation’s chipmaking industry. The bill will increase production of critical computer chips in the United States to avoid future supply chain issues and increase competition with China.
  • Senators Chuck Schumer and Joe Manchin reached a $700 billion deal on a sweeping climate, tax and health care bill. The plan includes $370 billion in energy and climate spending, about $300 billion in deficit reduction, subsidies for Affordable Care Act premiums and tax changes.
  • 170 companies released their second quarter results, including Microsoft, Alphabet, Meta Platforms, Apple and Amazon. Results were mixed, with many companies warning of inflation and slower growth in the future. Still, markets managed to end the week and month up.

It’s a lot to digest. Especially in a very persistent heat wave.

Unfortunately, we have another busy week of data before we take a break.

Revenue continues next week with reports from Starbucks, Uber and Airbnb.

We also anticipate the release of some important economic data: JOLT (job openings) unemployment rates and the PMI, a key indicator of US economic activity, are all heading our way.

So forgo swimwear and SPF for now. Or don’t, and bring the beach to your desk. Holidays are a state of mind, right?

The-CNN-Wire™ & © 2022 Cable News Network, Inc., a WarnerMedia company. All rights reserved.

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TTD board member’s real estate firm caught in refund row – The New Indian Express https://trojanestate.com/ttd-board-members-real-estate-firm-caught-in-refund-row-the-new-indian-express/ Sun, 31 Jul 2022 23:15:00 +0000 https://trojanestate.com/ttd-board-members-real-estate-firm-caught-in-refund-row-the-new-indian-express/

By Express press service

HYDERABAD: About 1,500 customers of Sahiti Infratec Ventures Pvt Ltd (SIVPL) tried to approach the police to complain about not being given their promised dream homes they had paid for in 2019 under the bid pre-launch of ‘Sahiti Saravani Elite’ at Ameenpur.TTD Board Member Lakshmi Narayana Bhoodati is the Managing Director of SIVPL.

According to the plaintiffs, Bhoodati made public a pre-launch bid in 2019, promising world-class equipment in the project named Sahiti Saravani Elite at Ameenpur in Sangareddy. invest in the project, hoping for a better future for us and our children. However, they have been blocking us since 2019 and the project is far from over,” some of the complainants said.

According to customers, during the pre-launch, the company mentioned that the land acquisition, permitting and execution of the project will take place soon, but this never happened. Finally, after three years of exasperating waiting, a few customers decided to cancel their reservation and asked the company to refund the amount of the reservation.

However, checks delivered by the company for the refund amount have bounced. “From then on, those 150 customers pursued the matter with SIVPL, who kept pushing the issue back, asking for more time to complete the refund,” the customers said. Meanwhile, Bhoodati has denied all the allegations.

Customers claimed that SIVPL first said refunds would be made by September 2021, then asked for time until December 2021, then January 2022, then April 2022. “They just didn’t honor their own words,” customers said.

However, a few customers said a few refund checks issued in November 2021 cleared, while a majority were rejected or were stopped by the drawer. Customers claimed that the MD had promised them that it would refund all booking amounts by March 2022.

“After repeated calls, Bhoodati Narayana scheduled a meeting with us on April 28 at his headquarters in Jubilee Hills, but the meeting never took place. We waited so long and finally decided to approach the police” , customers said.

However, when they reached the CCS to lodge their complaint, they were unable to do so since the DCP concerned was not present. Bhoodati Narayana posted a video in which he claims that “a few customers” are scaring away other customers, causing investors to withdraw from SIVPL.

“We have refunded the reservation amount requested by a few customers regardless of the Covid outbreak. Refunds for everyone who requested it will be forthcoming soon,” he said. Bhoodati added that he would hold a meeting in the next 15 days and assured clients that the funds were flowing.

]]> Era of Soaring House Prices Comes to an End as Central Banks Hike Rates | Larry Elliot https://trojanestate.com/era-of-soaring-house-prices-comes-to-an-end-as-central-banks-hike-rates-larry-elliot/ Sun, 31 Jul 2022 16:50:00 +0000 https://trojanestate.com/era-of-soaring-house-prices-comes-to-an-end-as-central-banks-hike-rates-larry-elliot/

IIt’s finish. An era of steadily rising house prices spurred on by cheap money is coming to an end. Central banks have created a colossal housing boom and they will soon have to deal with the consequences of the bursting of the bubble.

In China, this is already the case. Banks in the world’s second-largest economy have been ordered to bail out property developers so they can complete unfinished projects. Mortgage boycotts are on the rise because people are, unsurprisingly, unhappy paying mortgages for properties they can’t occupy.

Sales of new properties have plummeted and new housing starts have nearly halved from pre-pandemic levels, posing spelling problems for heavily indebted property companies, the banks they borrowed from and the economy at large. The real estate sector accounts for about 20% of China’s gross domestic product. Rising real estate prices are already a thing of the past.

The US economy contracted for a second consecutive quarter in the three months to June and one of the factors was the rapid slowdown in the housing market. In the two years since the start of the coronavirus pandemic in the spring of 2020, US house prices have soared, rising 20% ​​on the year to May. But the market is cooling rapidly, with the average price of new homes falling sharply in June.

The housing market is cooling in the United States. Photograph: Mike Blake/Reuters

Britain seems to be bucking the trend. According to figures from Halifax, the nation’s largest mortgage lender, house prices are rising at an annual rate of 13% – the highest in nearly two decades. Here too, the picture changes.

Last week, the Office for National Statistics released data on housing affordability, based on the ratio of house prices to average incomes. In Scotland and Wales, the ratio was 5.5 and 6.0 respectively, below the highs reached at the time of the 2007-09 global financial crisis. In England, the ratio was 8.7, the highest since the series began in 1999.

In England, there were regional variations. In Newcastle upon Tyne, the cost of an average house was 12 times the annual income of someone in the bottom 10% income bracket. In London it was 40 times, and it’s almost certainly higher now. The ONS figures cover the period up to March 2021 and since then property prices have significantly outpaced wages.

There comes a time when housing simply becomes too expensive for potential buyers, but an extended period of ultra-low interest rates means it has taken time to get to that reality check point. Central banks have made the unaffordable affordable by keeping monthly mortgage payments low.

This is true all over the world, which is why from New York to Vancouver, from Zurich to Sydney, from Stockholm to Paris, the trend in real estate prices has continued to rise.

So far, at least. Western central banks are aggressively raising interest rates, making mortgages more expensive. Even before the US Federal Reserve announced a second successive 0.75 point increase in official borrowing costs last week, a new borrower taking out a 30-year fixed mortgage was paying around 5.5% , double that of the previous year. This increase explains why fewer Americans are buying new homes and why prices are falling.

In the UK, the Bank of England cut interest rates to 0.1% at the start of the pandemic and left them at that level for nearly two years. This allowed buyers to take out fixed-term mortgages at extremely competitive rates, which hit a low of 1.4% last fall. But since December last year, the Bank has tightened its policy and these mortgages will increase when the fixed terms run out. Average mortgage rates are now 2.9%.

Central banks say the highest inflation in decades means they have no choice but to tighten policy – but they are doing so at a time when major economies are falling or heading into recession . The toxic mix for house prices is rising interest rates, collapsing growth and rising unemployment. Of these, only the last is missing, but if the winter is as bleak as policy makers predict, it’s only a matter of time before the queues get longer.

Last week, the International Monetary Fund released forecasts for the global economy that were decidedly bleak. Noting that the three main engines of growth – the United States, China and the euro zone – were at a standstill, the fund said that the risks were tilted strongly on the downside.

According to the IMF, there have only been five years in the past half-century when the global economy has grown below 2%: 1974, 1981, 1982, 2009 and 2020. A complete halt in shipments of Russian gas to Europe, stubbornly high inflation or a debt crisis were among the factors that could cause 2023 to join this list. A global real estate crash would guarantee that is the case.

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That’s not to say there aren’t good reasons to want a purge of excesses from the real estate market. Soaring property prices discriminate against the young and the poor, lead to a misallocation of capital into unproductive assets, and add to demographic pressures by discouraging couples from having children.

However, central banks are trying to fine-tune a soft landing in which the downturn is short and shallow, and the rise in unemployment is enough to ease upward pressure on wages but remains modest. A housing price crash is not part of the plan as it would ensure a hard landing.

There is no appetite for a repeat of 2007, when the subprime mortgage crisis in the United States triggered the near collapse of the global banking system and led to the last major recession before the one caused by the pandemic. . This is why the Chinese government is trying to prop up real estate developers and why Western central banks may stop raising interest rates sooner than expected by financial markets. We have been here before.

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Will America’s Biggest Publisher Get Even Bigger? https://trojanestate.com/will-americas-biggest-publisher-get-even-bigger/ Sun, 31 Jul 2022 09:00:08 +0000 https://trojanestate.com/will-americas-biggest-publisher-get-even-bigger/

When the nation’s largest publisher, Penguin Random House, reached a deal in the fall of 2020 to acquire rival Simon & Schuster, publishing executives and antitrust experts predicted the merger would draw scrutiny from the from government regulators.

The merger would radically change the literary landscape, reducing the number of major publishing houses – known in the industry as the Big Five – to four. (Or, as one industry analyst put it, it could create the Big One and the other three.)

Such a change could ripple through the industry, potentially affecting small publishers, authors and ultimately the books that reach readers, novelist Stephen King, who was called by the government to testify at trial.