Friday, December 9, 2011

Real Estate Markets in Canada, China and Australia = CaCA

The investment world loves its acronyms (BRICS, PIIGS...etc) but I thought it was missing one which describes the housing markets in Canada, China and Australia. Then it hit me like a bag of.......CaCA! While Canadians, Chinese and Australians appear to still be living in a world of denial, evidence that their housing booms are in fact bubbles has been overwhelming. Similar to the smell of, yup, CaCA.

The Bank of Canada recently released its December "Financial System Review". It highlights some concerns about Canadian household finances and housing prices. However, it mostly down plays the housing concerns in typical central banker speak.
"In Canada, the elevated levels of household debt and housing prices require continued vigilance and close co-operation among Canadian authorities."
"Some measures of housing affordability suggest continued imbalances, owing to the robust performance of this market. In particular, house prices remain very high relative to income (Chart 26). Since the adverse impact of elevated residential property prices on affordability has been largely offset by low interest rates, affordability would be considerably curtailed if interest rates were closer to historical norms (Chart 27).
Certain areas of the national housing market may be more vulnerable to price declines, particularly the multiple-unit segment of the market, which is showing signs of disequilibrium: the supply of completed but unoccupied condominiums is elevated, which suggests a heightened risk of a correction in this market."
Gee, where does that 3rd paragraph sound familiar (see around the 1:20 mark in the below video, although the whole thing is classic.).  Obviously, in the US, it was more then the condo market and it will be in Canada too. Although, Vancouver will be Canada's version of Miami.

Clearly Canada's party will end at some point. Then in Australia we have another disaster waiting to happen (although, it has likely already begun there). Similar to Canada, it's fate was only delayed after the 2008 crash. The case of Australia's bubble is laid out in great detail in "Bubbling Over: The End of Australia’s $2 Trillion Housing Party" by Philip Soos.

Believe it or not, housing prices cannot deviate from rents by that margin forever. Fundamentals do matter.

Then of course we have China. What more can be said about China's pending disaster. We had all seen the videos of China ghost cities and malls. Of course the deniers are still in full force claiming that China's centrally planned economic structure has everything under control.......until reality becomes undeniable. The question is not whether it will burst, but how long the Chinese government can prop it up. Some of the ghost cities are already being hit such as China's city of Ordos which is discussed below. More pictures of China's out of control building can be seen here.

And as Reuters recently reported:
"After a housing bubble that doubled values in 35 cities between 2004 and 2009, prices are now falling nationwide. The central bank said on Friday property prices had reached a turning point while banks are worried a price slide of 20 percent could trigger panic selling."
"But prices in Ordos have already fallen below the level that analysts say would cause serious problems if mirrored nationally.
Prices have plummeted 20-30 percent in certain property developments in Beijing and Shanghai.
Nationwide, the decline is so far more modest. Home prices fell slightly in October from September for the first time this year, official data showed, but private surveys indicated prices began falling in September and continued through November.
With local governments often dependent on land sales to fund payments on a staggering 10.7 trillion yuan (1.1 trillion pounds) of debt, Beijing worries that a collapsing property market will trigger a wave of defaults that in turn will hit the banks."
"In Ordos, the government announced a bailout fund of between 7.5 billion and 10 billion yuan to support its beleaguered developers.
Still, that may not be enough. A commercial real estate agent, who only gave his surname Li, said that despite the government actions he was planning to return to his native Guangdong Province after six unsuccessful months in Kangbashi.
"There isn't much commercial real estate here. You need private businesses for that, and here it's all government money." 
The shock to natural resource demand from a China real estate bust is what will really bring the Australian and Canadian markets back to reality quickly. After all, its CaCA, a big interconnected mess!



  2. excellent shared information. I agree with one of the comment, GREEDINESS is the the idea on this. graphic design maryborough

  3. We have to ensure that we keep doing what we know is effective on our business. Make sure that we continue doing things right for our business to improve. Continue doing the right things and make sure that we accomplish what we have in mind regarding Real Estate Investing.

  4. a Problem: HP Printer not connecting to my laptop.
    I had an issue while connecting my 2 year old HP printer to my brother's laptop that I had borrowed for starting my own business. I used a quick google search to fix the problem but that did not help me. I then decided to get professional help to solve my problem. After having received many quotations from various companies, i decided to go ahead with Online Tech Repair ( Reasons I chose them over the others:
    1) They were extremely friendly and patient with me during my initial discussions and responded promptly to my request.
    2) Their prices were extremely reasonable.
    3) They were ready and willing to walk me through the entire process step by step and were on call with me till i got it fixed.
    How did they do it
    1) They first asked me to state my problem clearly and asked me a few questions. This was done to detect any physical connectivity issues with the printer.
    2) After having answered this, they confirmed that the printer and the laptop were functioning correctly.
    3) They then, asked me if they could access my laptop remotely to troubleshoot the problem and fix it. I agreed.
    4) One of the tech support executives accessed my laptop and started troubleshooting.
    5) I sat back and watched as the tech support executive was navigating my laptop to spot the issue. The issue was fixed.
    6) I was told that it was due to an older version of the driver that had been installed.
    My Experience
    I loved the entire friendly conversation that took place with them. They understood my needs clearly and acted upon the solution immediately. Being a technical noob, i sometimes find it difficult to communicate with tech support teams. It was a very different experience with the guys at Online Tech Repairs. You can check out their website or call them on 1-914-613-3786.
    Would definitely recommend this service to anyone who needs help fixing their computers.
    Thanks a ton guys. Great Job....!!


    Is Your Computer Sluggish or Plagued With a Virus? – If So you Need Online Tech Repairs
    As a leader in online computer repair, Online Tech Repairs Inc has the experience to deliver professional system optimization and virus removal.Headquartered in Great Neck, New York our certified technicians have been providing online computer repair and virus removal for customers around the world since 2004.
    Our three step system is easy to use; and provides you a safe, unobtrusive, and cost effective alternative to your computer service needs. By using state-of-the-art technology our computer experts can diagnose, and repair your computer system through the internet, no matter where you are.
    Our technician will guide you through the installation of Online Tech Repair Inc secure software. This software allows your dedicated computer expert to see and operate your computer just as if he was in the room with you. That means you don't have to unplug everything and bring it to our shop, or have a stranger tramping through your home.
    From our remote location the Online Tech expert can handle any computer issue you want addressed, like:
    • - System Optimization
    • - How it works Software Installations or Upgrades
    • - How it works Virus Removal
    • - How it works Home Network Set-ups
    Just to name a few.
    If you are unsure of what the problem may be, that is okay. We can run a complete diagnostic on your system and fix the problems we encounter. When we are done our software is removed; leaving you with a safe, secure and properly functioning system. The whole process usually takes less than an hour. You probably couldn't even get your computer to your local repair shop that fast!
    Call us now for a FREE COMPUTER DIAGONISTIC using DISCOUNT CODE ( on +1-914-613-3786 or chat with us on

  6. From general startup issues like the above (probably a dead power supply or bad switch – or maybe the cord got pulled out) to things like dead disk drives, bad wireless network connections, setting up wireless networks or even just helping you navigate through the new Windows 8 interface you’ve been dreading – calling Lizard webs laptop repair in Raleigh is a great step towards making that day a super one again. That Windows 8 interface? Check it out here at managed IT services

  7. i was talking about this webpage for free brave frontier hacks and other secrets tool .click at the same link to grab free gems and coin online.

  8. Our discussion is on best place for free blitz brigade hack than we search this website for best place for free blitz brigade without any payment than visit on this website and get blitz brigade hack tool ans more absolutely free.