Connecticut’s governor proposed putting a toll gantry on the 1-mile section of I-684 that goes out of New York.
The proposal to put a tollbooth on the Connecticut mile of Interstate 684 apparently elicited negative reactions from Connecticut politicians as well as New Yorkers. Democrats in the Connecticut State Senate are less than enthusiastic about Gov. Ned Lamont’s plan for tolls at 14 spots throughout the state.
Lamont wants to put tolls on roads in his state to raise revenue and pay for repairs. One of the roads he picked is I-684, the “interstate highway” that runs down the east side of Putnam and Westchester counties in New York.
The toll plaza would go in the 1.4 mile stretch of I-684 that is in Connecticut. The toll gantry would be sandwiched between the exit for the Westchester County Airport to the south and the exit for Armonk, home of IBM, to the north.
Lamont met with the Democratic caucus Wednesday to go over his plan and hear questions and concerns from the caucus. Senate President Martin Looney told Patch that there was broad support for Lamont’s proposed transportation fixes, but disagreement on how to pay for them.
“We need to find something that is broadly palatable in the General Assembly and also to the public,” Looney said.
The caucus didn’t take a headcount on support for Lamont’s plan. Looney said Lamont was going to reflect on what he heard in the caucus meeting.
Senate Majority Leader Bob Duff said everyone acknowledges that it’s vitally important to upgrade Connecticut’s transportation infrastructure. He said Lamont carefully listened to concerns from legislators.
“How we get there and how we pay for it is certainly a different story,” Duff said. “But it was a very frank conversation with the governor.”
Lamont campaigned on truck-only tolling, but said after being elected it wouldn’t create enough revenue for the state and could run into some legal challenges from the trucking industry. Lamont rolled out a 50-toll gantry plan that took up part of the 2019 legislative session, but in the end never got a full vote. Any toll vote would likely become a hot-button issue in the 2020 election where state representatives and senators are up for re-election.
Legislative Republicans in Connecticut have been steadfast in their opposition to tolls. House Republican Leader Themis Klarides said that there is common ground in Lamont’s latest plan and it was more well-thought than previous iterations, but tolls are still a non-starter.
Non-starter was exactly the term New York State Senator Pete Harckham used, talking about his constituents in Dutchess, Putnam and Westchester counties who would be unfairly affected. “Governor Lamont’s plan to place a toll on I-684 is a nonstarter because it disproportionately impacts New York commuters. There are enough roads elsewhere in Connecticut to toll to fund infrastructure projects in Connecticut.”
New York’s housing crisis has taken center stage in the last few months: A bold package of bills was passed in Albany to protect tenants, while the city’s Rent Guidelines Board voted to raise the rent despite clamors from residents of rent stabilized apartments. Something that housing advocates have continuously cited is the number of sheltered and unsheltered homeless in the city.
A new study by the Institute for Children, Poverty and Homelessness (ICPH), found that on July 1, 2018, there were over 12,000 families with children sleeping in a city-run shelter. The study also explored the biggest factors—family, neighborhood, and shelter dynamics—that lead to homelessness.
Overall, the study says that in fiscal year 2016, the main reasons families entered shelters included domestic violence (30 percent), eviction (25 percent), and overcrowding (17 percent).
In terms of shelter dynamics, the ICPH analysis found that neighborhoods with the highest family shelter capacity include Concourse/Highbridge, East Tremont in the Bronx, and Brownsville in Brooklyn. The report also notes that in 2015, the district with the most families entering shelters was East New York in Brooklyn.
Neighborhood dynamics contributing to homelessness, the study found, include educational attainment, unemployment, rent burden (as well as disappearing affordable units), and poverty.
An interactive map (below) shows the percentage of severely rent-burdened households in each borough—meaning households spending 50 percent or more of their income on rent. The map shows that the Bronx had the most severely rent-burdened households with 33.1 percent, followed by Staten Island at 29.5 percent (those figures are based on the U.S. Census Bureau’s 2017 American Community Survey.)
The study lists specific neighborhoods facing the most instability for different reasons. In Borough Park, for instance, 44 percent of households are severely rent burdened, and in Mott Haven, 40 percent of residents have less than a high-school diploma.
“Severely rent burdened households are often just one lost paycheck or medical emergency away from eviction,” the study reads. “As rents continue to rise, the preservation of affordable housing is essential to keeping families on the brink of homelessness stably housed in their communities.”
Also included in the map are the number of disappearing affordable units in each neighborhood. Those with large numbers of lost affordable units include Battery Park/Tribeca, Midtown Business District, Williamsburg/Greenpoint, Fort Greene/Brooklyn Heights, Fresh Meadows/Briarwood, Coney Island, and East Harlem.
Though the ICPH report says the number of families with children in shelters has increased by almost 55 percent between 2011 and 2018, the city’s Department of Homeless Services told Curbed that the overall numbers have gone down.
“Our transformation plan puts people first, offering them the opportunity to get back on their feet in their home boroughs, closer to support networks, including schools,” Isaac McGinn, a city Department of Homeless Services spokesperson told Curbed in a statement.
“As we turn the tide on this citywide challenge, we’ve driven down the number of families experiencing homelessness overall, while also helping hundreds of families in shelter move closer to their children’s schools—and we’ll be taking this progress even further as we continue to implement our five-year plan,” he added.
State officials held hearings last week into Con Ed’s ban on new natural-gas customers in much of Westchester, but it’s the state itself that blocked new gas pipelines. What’d anyone expect?
Now, it turns out, the county’s nightmare may begin sooner than thought: When Assemblywoman Amy Paulin, who represents southern Westchester, asked Con Ed if it could delay the ban (set for March 15), the utility was frank: Supply and demand determine whether there’s enough gas, it said. So shortages could occur even beforethen.
Paulin isn’t the only one worried: “A March 15 deadline is just far too soon,” warned County Executive George Latimer. And the ban could choke an economic comeback in Westchester. “A moratorium of no new hookups would create a very chilling effect” on the “revival” in New Rochelle, Yonkers and White Plains.
Yet Con Ed has been warning for a long time now. In 2017, it tried to get the Public Service Commission to let it offer incentives to pipeline developers, who feared being denied permits — but was turned down.
The PSC denies that Con Ed came to it with any “pipeline solution,” Paulin said, but public documents show that’s not so.
Let’s face it: Even if the state forced Con Ed to sign up new customers, the utility still couldn’t deliver gas it doesn’t have.
Yet this disaster is entirely self-inflicted. To suck up to climate-change radicals, who hope to do away with all fossil-fuel-based energy, Gov. Cuomo has been slow to OK new pipelines. In response, pipeline companies have lost interest in New York.
Absent new gas supplies, businesses and residents will shun the county. No one will freeze, but Westchester faces new economic drag.
And New York City’s not far behind.
One hope: a court ruling last month that states can’t use their water-quality certification process to delay federal licensing of hydropower plants. “The scope of the ruling enhances the odds” that the Constitution pipeline will be built, notes Rob Rains of Washington Analysis. Constitution’s sponsors want the court to rule against New York efforts to block the pipeline.
Alas, anti-pipeline foes are gaining steam in New York. Last year, city Comptroller Scott Stringer bucked labor unions to denounce the plan for the Northeast Supply Enhancement pipeline, a source of natural gas that’s vital to the city’s growth. At least seven public-advocate wannabes have now joined him.
Maybe they want to send city folks fleeing, much as a dead economy has Upstaters doing. Then again, if everyone leaves, there’ll be no need for natural gas . .
Pending home sales declined slightly in November on an annualized basis for the eleventh straight month. The Pending Home Sales Index decreased by 0.7% from 102.1 in October to 101.4 in November, and was 7.7% below the level one year ago. The Pending Home Sales Index (PHSI) is a forward-looking indicator based on signed contracts reported by the National Association of Realtors (NAR).
According to NAR, the decline in PHSI may not fully capture the current situation, as it did not reflect the impact of recent favorable conditions mortgage rates. But the housing market has been slowing down this year due to rising mortgage rates.
The PHSI increased 2.7% and 2.8% in the Northeast and West, but decreased 2.3% and 2.7% in the Midwest and South. Year-over-year, the PHSI declined in all regions, ranging from a decline of 3.5% in the Northeast to a decrease of 12.2% in the West. NAR stated that the annual drop in the West may be explained by the growing concerns of affordability due to rapidly increasing home prices in the region.
Existing sales slightly increased in November, but builder confidence fell in December to its lowest value since May 2015 as concerns over housing affordability persist. However, NAR anticipates a solid long-term prospect for home sales, as the current home sales level matches sales in 2000 while more jobs are created now compared to the early 2000’s.
Construction companies have been ratcheting pay higher to find workers.
Average hourly earnings for construction workers were $30.21 in October, the Labor Department reported Friday. That represented a 3.9% increase in wages compared to a year ago, the strongest yearly gain since mid-2009.
According to the Census Bureau’s Survey of Construction, the share of new homes started with 5,000 square feet or more of living space stood at 3.08 percent in 2017, essentially unchanged from 3.05 percent in 2016. The total number of 5,000+ square-foot homes started in absolute terms was 26,000, up from 24,000 in 2016.
In 2015, the number of 5,000+ square feet homes started was the highest since 2007, and their share of the new market was the highest since the inception of the series in 1999. In the boom year of 2006, 3.04% or 45,000 new homes started were 5,000 square feet or larger. In 2007, the share of new homes this size was 3.56%, yet the total number that year fell to 37,000. In 2008, only 20,000 such homes were started, or 3.24% of the total. From 2009 to 2012, the number of these large homes started remained well under 20,000 a year and accounted for less than 3% of all new single-family construction during this period.
A previous post discussed a recent, slight downward trend in the median and average size of new single-family homes evident in quarterly data and attributed this to an expansion in the entry-level segment. The post concludes that home size is expected to trend lower. Some growth is possible at the upper tail of the size distribution, however, even if the overall average is trending in the opposite direction.
When analyzed by the different characteristics, 80 percent of 5,000+ square feet home started in 2017 have a porch, 74 percent have a finished basement, 68 percent have a 3-or-more car garage, 63 percent have a patioand more than half (56 percent) have a community association. Fifty-eight percent of the homes have 5 bedrooms or more and 73 percent have 4 bathrooms or more.
With just about two weeks remaining before the midterm election, early voting has begun in many states. And as is true every year, several states will see significantly better turnout than others — sometimes twice as high. And while there are numerous reasons why people don’t vote, a recent study found that one major factor is that some states make it much harder than others to cast a ballot.
New York, which does not allow people to vote early, saw 56.2 percent of voters turn out for the 2016 election, following 29 percent in the 2014 midterm election and 53.5 percent in the 2012 election, according to an analysis of election data by the nonprofit organization FairVote. FairVote is a nonprofit dedicated to reforming America’s electoral system to achieve full participation and obtain a “truly representative democracy.”
If history is any indicator, several states will see between just 25 percent and 35 percent of voters turn out. This includes Texas, which ranked dead last in the country for voter turnout in the 2014 election with a paltry 28.3 percent. Here were the worst states for voter turnout (Washington, D.C., included) in the 2014 midterm election:
Meanwhile, some states see more than double that turnout. Maine had the highest voter turnout in the 2014 election at 58.5 percent of eligible voters. Wisconsin, Colorado, Alaska and Oregon rounded out the top five with 56.8 percent, 54.5 percent, 54.4 percent and 53.5 percent of voters casting a ballot, respectively. All except Oregon allow residents to vote up to 15 days before Election Day.Subscribe
As noted earlier, there are a variety of reasons that some states see better turnout than others. FairVote noted some of the biggest involve how competitive the races are supposed to be, the demographics of the voting population — voters tend to be older, wealthier, more educated and white — and how restrictive voting laws are.
A new study lent a lot of credence to that last factor. Researchers at Northern Illinois University, Jacksonville University and Wuhan University in China found that states are influencing who votes by either making it easier or harder to cast a ballot. They created an index and ranked each state according to the time and effort it took to vote in each presidential election from 1996 through 2016. They scrutinized the effect of more than 30 factors involving registration and voting laws.
“The study does give us some very substantive findings that we can report about the effect on voter turnout,” wrote lead author Scot Schraufnagel. “But we created this index with the idea in mind that it’s going to have a lot of interest for reasons beyond voter turnout because it helps to define an electoral climate, which might influence whether people are willing to run for public office or who is willing to run for office. There also are implications for civil rights. We know, anecdotally, states with larger African-American populations have higher ‘cost of voting’ values.”Mississippi, Virginia, Tennessee, Indiana, Texas and Michigan were ranked as the states where it’s most difficult to vote. Maine, Oregon, California and Colorado all cracked the top 10 in places where it’s easiest.
In 37 states, including three that mail ballots to all voters, along with Washington, D.C., any eligible voter can cast a ballot in person before Election Day without an excuse, according to the National Conference of State Legislatures. Colorado, Washington and Oregon use all-mail voting.
Meanwhile, 13 states, including New York, Michigan and Pennsylvania, offer no early voting and require you to provide a reason to vote by absentee ballot.
Making it easier to vote nationwide could boost election turnout by about 10 percentage points, Schraufnagel noted. This includes same-day voter registration policy, mail-in voting and, yes, early voting.
Contracts for new single-family home sales declined in September, as eroding affordability conditions reduced sales volume. New single-family home sales declined to a significantly lower 553,000 seasonally adjusted annual rate, a 5.5% drop from a downwardly revised 585,000 annual rate recorded in August. The sales data are produced by HUD and the Census Bureau.
The weak September estimate was the lowest annual rate since December 2016. It marks a notable retreat from the recent, modest growth trend that had been in place due to solid economic conditions and unmet demographic demand but constrained by rising construction costs due to labor access issues, building material pricing and rising regulatory costs. The drop in monthly sales volume also pushed the months’ supply number to an elevated 7.1, the highest since the summer of 2011.
Despite the softer summer and early fall numbers, total sales for the first nine months of 2019 (485,000) are 3.5% higher than the comparable total for 2017 (469,000). Nonetheless, mirroring declining sales volume for the resale market, higher interest rates, storm disruption effects, and spring and summer hikes in lumber prices have taken a toll on the nation’s building markets, even as macroeconomic conditions remain positive.
Inventory increased in September to 327,000 single-family homes for sale. September saw a notable uptick in homes not-started construction but otherwise listed for sale, rising from 57,000 in August to 64,000 in September (compared to 47,000 in September of 2017). Additionally, sales of homes not started construction were lower on a year-over-year basis (168,000 annual rate in September compared to 185,000 in September of 2017), suggesting the current soft patch is demand-side focused rather than supply-side constrained.
Median new home sales pricing has decreased over the last year as the mix of supply has adjusted. Median new home price was $320,000 in September, compared to $331,500 a year ago. Managing rising construction costs in the months ahead will be a key challenge for housing affordability as input costs increase, although recent declines in lumber prices should help.
For the first nine months of 2018 (and relative to the first nine months of 2017), new home sales were up 9.7% in the Midwest, 4.4% in the South, 3.9% in the West, and down 16.5% in the Northeast, due to tax reform-related effects and affordability concerns.
While investors are no doubt wringing their hands over what’s going on in the stock market this week, here’s another thing to fret over: rising mortgage rates.
“What many in 2016 thought would never happen again is now reality,” writes Wolf Richter of the Wolf Street blog. “A line in the sand has been breached.”
He explained that the average interest rate for 30-year fixed mortgages with conforming loan balances ($453,100 or less) and a 20% down-payment just passed 5% — the highest since 2010, according to the Mortgage Bankers Association.See Also
This, however, is not quite the “pain threshold” for the housing market, Richter wrote. No, that number is 6%, but that rate is moving ever closer.
“This is still historically low. It would take rates back to December 2008, when the Fed was kicking off its first round of QE to repress long-term rates and inflate asset prices,” he said. “Beyond that are the now unimaginably high rates of 7% and 8%.” Here’s a chart for some perspective:
Mortgage rates loosely follow the path of the 10-year U.S. Treasury noteTMUBMUSD10Y, -0.86% . The spread between the average 30-year fixed mortgage rate and the 10-year comes in around 1.5 to 2.0 percentage points over time. The yield on the benchmark government bond has soared this month to roughly seven-year highs amid worries that increasing inflation will erode the value of fixed-income assets.
“The 10-year yield has moved in two surges so far in this rate-hike cycle, each of them over 1 percentage point, with some back-tracking in between,” Richter wrote. “It appears to have launched ‘Surge 3.’ If it plays out, this surge would push the 10-year beyond 4%. And this would bring the 30-year fixed rate into the neighborhood of 6%.”
“This new mortgage rate environment is meeting home prices across the U.S. that have surged over the past years,” Richter wrote. “Affordability issues, already tough to deal with at 4% and 4.5% and even tougher to deal with at 5%, are going to be much tougher at 6%.”
Consequently, and unsurprisingly, he said the red-hot housing markets, like Seattle, San Francisco and Denver, are most at risk.
“These price increases came on top of the crazy peaks of Housing Bubble 1,” Richter wrote. “So a 6% average 30-year fixed rate in these inflated markets will likely change the equation a lot more than in some of the less inflated markets.”
House prices rose in 25 out of the 39 world’s housing markets which have so far published housing statistics, using inflation-adjusted figures.
The more upbeat nominal figures, more familiar to the public, showed house price rises in 32 countries. House prices fell in only 6 countries and remained stable in 1 country.
Most of Europe continues to experience strong price rises, especially Ireland and the Netherlands. In Asia Hong Kong and Macau have risen strongly over the past year. There have also been notable turnarounds in Thailand, Egypt, and Puerto Rico. But China, Ukraine, and most of the Middle East are experiencing either house price falls – or a sharp deceleration of house price rises
The strongest housing markets in our global house price survey during the year to Q2 2018 included: Hong Kong (+13.15%), Ireland (+11.57%), Netherlands (+7.24%), Macau (+6.31%), and Mexico (+5.12%) using inflation-adjusted figures.
The biggest y-o-y house-price declines were in Qatar (-16.91%), Kiev, Ukraine (-7.81%), Dubai, UAE (-7.63%), Turkey (-4.21%), and Shanghai, China (-3.51%), again using inflation-adjusted figures.
Momentum. Only 16 of the world’s housing markets for which figures are available showed stronger upward momentum during the year to Q2 2018, while 23 housing markets showed weaker momentum, according to Global Property Guide’s research. Momentum is a measure of the “change in the change”; simply put, momentum has increased if a property market has risen faster this year than last (or fallen less).
Inflation-adjusted figures are used throughout this survey. In the case of Kiev, Ukraine, the Global Property Guide adjusts using the official U.S. inflation rate since Ukrainian secondary market dwelling sales are denominated in U.S. dollars.
The strongest performing markets:
Hong Kong is now the strongest housing market in our global survey, up from fourth place in the previous quarter. Residential property prices surged 13.15% during the year to Q2 2018, after y-o-y rises of 12.28% in Q1 2018, 12.78% in Q4 2017, 13.41% in Q3 2017 and 19.27% in Q2 2017. Quarter-on-quarter, house prices increased 5.05% in Q2 2018.
The boom continues despite stamp duties being raised for all non-first time homebuyers (November 2016) and allowable loans on residential and commercial properties being cut in May 2017. In addition, Chief Executive Carrie Lam revealed in June 2018 another series of cooling measures, including a tax against vacant flats.
Ireland‘seconomy grew by 7.8% last year. It is not surprising that the housing market is growing at breakneck speed. Residential property prices were up by 11.57% during the year to Q2 2018, after y-o-y rises of 12.4% in Q1 2018, 11.7% in Q4 2017, 11.75% in Q3 2017, and 11.8% in Q2 2017. During the latest quarter, Irish house prices increased 2.22%. Ireland’s surging house prices are being driven by strong demand and supply shortages..
The Netherlands‘ housing market continues to perform very well, mainly due to robust demand, coupled with inadequate housing supply. The average purchase price of all dwellings rose by 7.24% during the year to Q2 2018, slightly up from the previous year’s 6.39% growth. On a quarterly basis, house prices were up 0.85% during the latest quarter.
During 2017, home sales surged 13% from a year ago. However in the first seven months of 2018, home sales dropped more than 7% from a year earlier due to supply shortages.
Macau’s housing market remains strong. The average transaction price of residential units rose by 6.31% during the year to Q2 2018, following y-o-y rises of 4.22% in Q1 2018, 4.93% in Q4 2017, 9.59% in Q3 2017 and 11.79% in Q2 2017. House prices increased by 5.21% q-o-q during the latest quarter. Macau’s housing market is buoyed by massive infrastructure investments, which will transform Macau’s connections to China and Hong Kong.
Mexico‘s housing market is strengthening, amidst improving economic conditions. The nationwide house price index rising by 5.12% during the year to Q2 2018, up from a y-o-y growth of just 0.73% in Q2 2017. On a quarterly basis, house prices increased 4.89% during the latest quarter.
Most Europe remains vibrant
European house price rises continue unabated. House prices have risen over the past year in no less than 13 of the 20 European housing markets for which figures were available.
Ireland remains the best performer in Europe, buoyed by its very strong economy. Residential property prices were up by 11.57% during the year to Q2 2018, after y-o-y rises of 12.4% in Q1 2018, 11.7% in Q4 2017, 11.75% in Q3 2017, and 11.8% in Q2 2017. During the latest quarter, Irish house prices increased 2.22%. Ireland’s surging house prices are mainly driven by strong demand as well as supply shortages. The Irish economy grew by around 7.8% last year and is projected to expand by another 5.6% this year, according to the European Commission.
The Netherlands‘ housing market remains strong, mainly due to robust demand, coupled with lack of adequate housing supply in the market. The average purchase price of all dwellings rose by 7.24% during the year to Q2 2018, slightly up from the previous year’s 6.39% growth. On a quarterly basis, house prices were up 0.85% during the latest quarter. During 2017, home sales surged 13% from a year ago, fuelled by low interest rates and robust economic growth. In the first seven months of 2018, home sales dropped more than 7% from a year earlier to 124,615 units, according to Statistics Netherlands. The Dutch economy grew by 3.1% in 2017, the highest growth since 2007. GDP is expected to grow by another 3.2% this year and by 2.4% in 2019, according to the IMF.
Portugal’s housing prices continue to rise strongly, fuelled by surging demand as well as improved economic conditions. Nationwide property prices rose by 4.53% during the year to Q2 2018, from y-o-y rises of 4.7% in Q1 2018, 3.03% in Q4 2017, 4.04% in Q3 2017 and 3.47% in Q2 2017. During the latest quarter, house prices were almost stable.
After more than three years of depression, house prices in Portugal started to recover in 2014. The Portuguese economy is expected to expand by 2.4% this year, after GDP growth of 2.7% in 2017, 1.6% in 2016, 1.8% in 2015, and 0.9% in 2014.
Other strong European housing markets included Iceland, with house prices rising by 4.18% during the year to Q2 2018, Spain (4.01%), and Riga, Latvia (2.68%). All, expect Latvia, recorded positive quarterly growth during the latest quarter. In terms of momentum, only Spain had stronger performance in Q2 2018 compared to a year earlier.
Minimal annual house price rises during the year to Q2 2018 were registered in Jersey (1.93%), Germany (1.74%), Slovak Republic (1.68%), Romania (1.66%), Athens, Greece (0.66%), Lithuania (0.48%) and Finland (0.43%). Only Germany, Slovak Republic, Finland and Lithuania saw quarterly growth during the latest quarter. On the other hand, only Jersey, Greece and Finland performed better in Q2 2018 compared to the previous year.
Other strong European housing markets included Jersey, with house prices rising by 8.91% during the year to Q1 2018, Macedonia (6.1%), Riga, Latvia (5.72%), Romania (4.71%), Portugal (4.7%), Germany (4.19%), and Estonia (3.72%). All recorded positive quarterly growth during the latest quarter. In terms of momentum, only Macedonia, Latvia, Portugal and Jersey had stronger performances in Q1 2018 compared to a year earlier.
Modest to very minimal annual house price rises during the year to Q1 2018 were registered in Sweden (2.97%), Slovak Republic (2.41%), Spain (2.37%), Vienna, Austria (1.68%), Finland (0.29%), and Lithuania (0.1%). Only Slovak Republic, Spain, and Austria saw quarterly growth during the latest quarter. On the other hand, only Spain, Austria and Finland performed better in Q1 2018 compared to the previous year.
The U.K.’s house prices were unchanged during the year to Q1 2018. London was the worst-performing region, with house prices falling by 3.4% y-o-y in Q1 2018. Some high-end London districts have experienced significant price-falls.
Europe’s weakest housing markets
Ukraine‘s housing market remains depressed, despite improved economic conditions. Secondary market apartment prices in Kiev fell by 7.81% (inflation-adjusted) during the year to Q2 2018, to an average price of US$ 1,071 per square metre (sq. m.) – worse than the previous year’s 5.13% decline. House prices fell 1.94% quarter-on-quarter in Q2 2018.
House prices in Ukraine have been falling over the past five years, particularly in 2014 (with prices plunging 37.38%) because ofhryvnia devaluation due to the Russian war. Ukraine’s economy is expected to expand by 3.2% this year, after expansions of 2.5% in 2017 and 2.4% in 2016, and contractions of 9.8% in 2015, 6.6% in 2014 and 0.03% in 2013.
Turkey’s housing market continues to weaken, amidst its plummeting currency (the lira), record-high inflation, and the country’s political conflict with the US. Nationwide residential property prices fell by 4.21% during the year to Q2 2018, in contrast with a 1.62 y-o-y rise in a year earlier – the fourth consecutive quarter of y-o-y price declines. On a quarterly basis, house prices dropped 1.99% during the latest quarter.
In June 2018, inflation rose to 15.39%, the highest level since 2004. The Turkish lira plunged to record lows, having shed more than 40% of its value against the US dollar in the past year. The government recently cut its 2018 GDP growth forecast to 3% – 4% from its earlier estimate of 5%.
Switzerland’s house prices fell 3.49% y-o-y in Q2 2018, the fourth consecutive quarter of annual price declines and the biggest fall in almost two decades. During the latest quarter, prices fell by 1.28% q-o-q.
After about 15 years of uninterrupted house price rises, the Swiss government’s efforts to cool the country’s overheated property market have finally succeeded. The Swiss economy is expected to expand by 2.3% this year and by another 2% in 2019, following annual growth of 1.1% in 2017, 1.4% in 2016, 1.2% in 2015 and 2.5% in 2014, according to the IMF.
Other weak European housing markets included Sweden, with house prices falling by 1.86% during the year to Q2 2018, Russia(-0.81%), Norway (-0.73%), and the UK (-0.09%). Only Norway and the UK saw quarterly growth during the latest quarter. All, except Russia, performed better in Q2 2018 compared to the previous year.
The Asia-Pacific region remains strong, but China slowing rapidly
Two of the five strongest housing markets in our global survey are in Asia-Pacific, with house prices rising in 6 of the 9 housing markets for which figures were available during the year to Q2 2018.
Hong Kong‘s housing market continues to boom, with residential property prices surging 13.15% during the year to Q2 2018, from y-o-y rises of 12.28% in Q1 2018, 12.78% in Q4 2017, 13.41% in Q3 2017, and 19.27% in Q2 2017. Quarter-on-quarter, house prices increased 5.05% in Q2 2018.
The latest house price rises come despite the government raising stamp duties for all non-first time homebuyers starting November 2016 and cutting allowable loans on residential and commercial properties in May 2017. In June 2018, Chief Executive Carrie Lam revealed another series of cooling measures, including a tax against vacant flats. In the first half of 2018, the total number of property transactions in Hong Kong increased 5.6% from a year earlier while sales values rose by 8.4%, according to the Ratings and Valuation Department (RVD). The economy expanded by 3.8% last year, the highest growth since 2011. The IMF recently raised its 2018 growth forecast for Hong Kong to 3.6%, up from its earlier estimate of 2.6%.
Macau’s housing market remains vibrant, amidst massive infrastructure investments, which will transform Macau’s connections to China and Hong Kong. The average transaction price of residential units rose by 6.31% during the year to Q2 2018, following y-o-y rises of 4.22% in Q1 2018, 4.93% in Q4 2017, 9.59% in Q3 2017 and 11.79% in Q2 2017. House prices increased strongly by 5.21% q-o-q during the latest quarter.
Macau’s economy grew by a spectacular 9.3% in 2017, a sharp turnaround from y-o-y declines of 0.9% in 2016, 21.6% in 2015, and 1.2% in 2014. Macau’s economy is expected to grow by 7% this year and by another 6.1% in 2019, according to the IMF.
Thailand’s housing market is rising strongly again, with nationwide house prices rising by 5.01% during the year to Q2 2018, in contrast to a y-o-y decline of 3.02% in the previous year. House prices fell slightly by 0.58% q-o-q in Q2 2018. During the first five months of 2018, nationwide land and building transactions rose by 3.2% y-o-y to THB 425.74 billion (US$ 13.1 billion). The Bank of Thailand recently raised its 2018 economic growth forecast for the fifth time to 4.4% from its earlier projection of 4.1% due to rising exports and strong private consumption.
Other Asia-Pacific housing markets with modest house price rises include New Zealand, with house prices rising by 4.3% during the year to Q2 2018, Tokyo, Japan (3.89%), and Indonesia (0.01%). All, except Japan, recorded positive quarterly growth during the latest quarter. In addition, all showed stronger upward momentum in Q2 2018 as compared to the previous year.
Sharp housing slowdown China
China’s housing market is now slowing, with new regulatory and monetary policies impacting developers and speculative buyers. In Shanghai, the price index of second-hand houses fell by 3.51% during the year to Q2 2018, in sharp contrast with a y-o-y rise of 6.76 in Q2 2017. During the latest quarter, house prices in Shanghai fell by 0.81%.
Despite this, the Chinese economy grew by 6.7% y-o-y in Q2 2018, only slightly lower than the 6.8% growth recorded the previous quarter. The economy is projected to expand by 6.6% this year, after expanding 6.9% in 2017 and 6.7% in 2016. China has achieved 27 straight years of above 6% growth.
Taiwan‘s housing market is still weak. Nationwide house prices fell by 0.27% during the year to Q2 2018, compared to a decline of 0.07% y-o-y in Q2 2017. Quarter-on-quarter, house prices fell by 0.15% in during the latest quarter.
South Korea‘s housing market is also fragile, with the nationwide housing purchase price index falling by 0.08% during the year to Q2 2018, from a y-o-y decline of 0.73% a year earlier. House prices dropped 0.04% q-o-q during the latest quarter.
Middle Eastern housing markets continue to struggle, but Egypt is an exception
TheMiddle East is now in the doldrums, with two of the three weakest housing markets in our global house price survey: Qatar and UAE. This is not surprising given the region’s ailing economy due to low oil prices and the ongoing political and diplomatic crisis. The Middle East’s economy grew by just 1.1% in 2017, the lowest level in eight years.
Qatar remains the weakest housing market in our global survey, amidst a sharp economic slowdown and the adverse impact of the blockade it is suffering from other Golf countries.
Qatar’s real estate price index dropped 16.91% during the year to Q2 2018, after y-o-y declines of 9.65% in Q1 2018, 10.42% in Q4 2017, 3.47% in Q3 2017, and 4.52% in Q2 2017. Property prices fell by 6.62% q-o-q during the latest quarter. The Qatari economy is expected to grow by a modest 2.6% this year, after annual average growth of 2.1% in 2016-17, 4.2% during 2012-15, and 15.7% in 2008-11.
Other Middle Eastern housing markets are also depressed.
In Dubai, residential property prices fell 7.63% during the year to Q2 2018, worse than the prior year’s 2.51% decline, amidst weak economic growth, low investor sentiment, and an oversupply of housing. During the latest quarter, house prices in Dubai dropped 1.33% q-o-q.
Likewise, Israel‘s decade-long house price boom is now over, with government cooling measures intensifying. The nationwide average price of owner-occupied dwellings fell by 1.21% during the year to Q2 2018, in sharp contrast with the previous year’s 4.06% growth. Israeli house prices fell 1.14% q-o-q in Q2 2018.
Egypt is an exception
Egypt’s housing market has risen over the past year, with the nationwide real estate index rising by 4.51% during the year to Q2 2018, in contrast with the y-o-y decline of 5.32% during the previous year. However house prices fell 9.91% quarter-on-quarter during the latest quarter.
Rapid house price rises should be expected in Egypt due to the dramatic inflation unleashed by more-than-halving of the currency’s value in November 2016. That house prices have not risen more is surprising.
President Abdel Fattah el-Sisi recently removed the last restrictions on foreign ownership of land and property in Egypt. He also allowed the government, the biggest landowner in Egypt, to use its land for public-private partnership schemes. The economy is expected to grow strongly by 5.2% this year, the fastest pace in a decade, according to the IMF.
The Americas are mixed
The U.S. remains strong but Canada is slowing sharply.
In Latin America, Mexico is strengthening while Chile has rebounded strongly. House prices are still falling in Brazil, despite some improvement.
After five years of strong house price growth, the U.S. housing market remains surprisingly vibrant. The Federal Housing Finance Agency’s seasonally-adjusted purchase-only U.S. house price index increased 3.67% y-o-y in Q2 2018 (inflation-adjusted), after annual rises of 4.93% in Q1 2018, 4.64% in Q4 2017, 4.68% in Q3 2017 and 4.77% in Q2 2017. The FHFA index rose by 0.07% q-o-q during the latest quarter.
U.S. housing demand and construction activity are mixed. In July 2018, sales of new single-family houses rose by 12.8% y-o-y while existing home sales were down by 1.5%. Building permits authorized for new housing units rose by 4.2% in July 2018 from a year earlier. On the other hand, new housing starts fell by 1.4% y-o-y in July 2018, while completions were slightly down by 0.8%.
The world’s biggest economy grew by 4.1% y-o-y in Q2 2018, nearly double the 2.2% growth the previous quarter and the fastest pace since Q3 2014. Growth was mainly driven by consumers spending their tax cuts and exporters rushing to get their goods delivered ahead of retaliatory tariffs. Recently, the IMF raised its 2018 US growth forecast from 2.3% to 2.7% and finally to 2.9%, an acceleration from the expansions of 2.3% in 2017 and 1.5% in 2016.
In December 2017, President Donald Trump signed a landmark tax law (known as the Tax Cuts and Jobs Act or TCJA) considered to be the largest overhaul of the U.S. tax code in over 30 years.
Canada‘s housing market is slowing sharply, amidst the introduction of more market-cooling measures and rising mortgage interest rates. House prices in the country’s eleven major cities rose by a meagre 0.41% during the year to Q2 2018, a sharp deceleration from last year’s 13.02% growth. Quarter-on-quarter, house prices increased 1.68% q-o-q in Q2 2018.
The Canadian Real Estate Association (CREA) expects home sales to fall by 11% this year, mainly due to higher home prices and interest rates, supply shortages, and heightened uncertainty. Demand is weak. In July 2018, actual sales activity dropped 1.3% from a year earlier. The Canadian economy grew by a healthy 3% in 2017, the highest growth since 2011. The economy is expected to expand by 2.1% this year and by another 2% in 2019.
The Latin Americas are improving
Mexico‘s nationwide house price index rose by 5.12% during the year to Q2 2018, up from just 0.73% y-o-y house price rises in Q2 2017. House prices increased 4.89% q-o-q during the latest quarter.
Chile‘s housing market continues to grow stronger, despite the introduction of a property sales tax in 2016. The average price of new apartments in Greater Santiago rose by 3.39% during the year to Q2 2018, up from the previous year’s 2.11% y-o-y growth. House prices fell by 1.07% q-o-q in Q2 2018.
Brazil’s house prices are still falling, but the outlook is now positive, amidst increasing construction and home sales, as well as a positive economic outlook. In Sao Paulo, house prices fell by 2.38% during the year to Q2 2018, after a y-o-y decline of 2.15% a year earlier. Quarter-on-quarter, house prices in Sao Paulo fell by 1.22% in Q2 2018.