Wanting to avoid the type of housing bubble that brought down the U.S. economy is sought by governments around the world. Kelvin Wong writes in the San Fransciso Chronicle that Asian real estate markets from Singapore to Beijing to Mumbai are stalling or have started declining from the effects of government rule changes for borrowing.
Kelvin reports that Hong Kong's median home price is 12.6 times the annual median household income. Vancouver is said to be in second place with a 10.6 mutiple and Sydney in third with 9.2.
Can you say 'Cities of the Wealthy'?
Remember this simply direct inverse relationship.
When borrowing costs go up (or qualifying rules tighten), prices go down. Kelvin Wong states in his article, "Last year's decline in prices and transactions coincided with the rise in borrowing costs." In the article, Lawrence, the Hong Kong-based analyst at Barclays says, "...each time mortgage rates go up, there are less people in the market."
CMHC backing fewer loans
Garry Marr in the Financial Post reports that Canada Mortgage and Housing Corp. is cutting back on mortgages it insures as the Crown corporation edges closer to a $600-billion cap imposed on it by the federal government.
"The risk to the taxpayer would be a collapse in the market leading to defaults like the U.S. saw."
Planning to buy a condominium? Are you self-employed? You may not want to put off buying too long!
Garry Marr's article states, "Sources have indicated the government is already considering tough new measures for calculating how the self-employed qualify for loans and tightening regulations for condominium buyers."
You would be advised to consider having yourself "pre-approved" by a lender to have yourself "lock in" to a mortgage package and interest rate.
Talk to your lender or an independent mortgage broker like Michael Friedman at Origin 604-657-1684 .
Bill de Mooy's HOMECONNECTION.com
Advice and information about real estate in Greater Vancouver.
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