Global house prices rebound as economists predict turning point

Across the 37 industrialized OECD countries, nominal house prices grew 2.1% in the third quarter of 2023

The widespread drop in global house prices that hit advanced economies has largely petered out, according to a Financial Times analysis of OECD data, leading economists to predict that the deepest property downturn in a decade has hit a turning point.

Across the 37 industrialized OECD countries, nominal house prices grew 2.1 per cent in the third quarter of 2023 compared with the previous three months, up from near stagnation at the start of last year.

Only about one-third of those countries reported a quarter-on-quarter decline in the latest period, down from more than half at the start of the year, according to the FT analysis.

“The most recent data suggest that house price falls have now bottomed out in most countries,” said Andrew Wishart, senior property economist at Capital Economics. “I think we’ve had the house price correction that we’re going to get.”

Housing prices took a hit in late 2022 after central banks in most economies raised interest rates at the fastest pace in decades to curb inflation. In OECD countries, house prices grew by just 0.6 per cent quarter on quarter at the end of 2022, the lowest nominal rate since 2012.

However, that decline has eased or even reversed in many economies as expectations that central banks will cut borrowing costs this year have helped mortgage rates to decline. A shortage of properties for sale has also helped to prop up valuations and real prices across the OECD returned to growth in the latest quarter.

House prices are increasing or stabilizing in most advanced nations, while other countries are seeing falls at a slower rate. Prices are likely to fall further in some countries such as Germany, Denmark and Sweden, which have larger rental markets, “but even in these economies we think that most of the fall in prices is already behind us”, said Wishart.

House prices are “close to the bottom in many places and recovering in a lot of places”, said Tomasz Wieladek, economist at investment company T Rowe Price. He said that migration and restrictive planning permission had kept the pressure on house prices in many countries, including the UK, Canada and Australia.

Households will continue to face higher mortgage costs as they come off fixed-rate deals, but many face better terms compared with last year. While UK and the US mortgage rates have ticked up in February, they remain well below national peaks reached in 2023.

House prices have held up best in the US, where solid economic and job growth helped nominal house prices to rise 5.2 per cent in the year to November.

Germany, by contrast, where economic woes, property overvaluations and a large rental market weigh on the sector, saw a 10.2 annual contraction last year — the worst of the EU economies excluding Luxembourg.

In Australia and New Zealand, house prices are growing again, national data shows, while in Korea they have stabilized after hitting a trough in mid-2023. In the EU, they rose at a nominal rate of 0.8 per cent quarter on quarter in the three months to September, reversing the fall seen at the start of the year, Eurostat data shows, though they were still 1 per cent lower on an annual basis.

“We believe that the correction in housing prices in Europe is not over yet, but we have probably seen the worst of it,” said Sylvain Broyer, chief economist of EMEA at S&P Global Ratings. He expects the price correction to continue in some countries, as mortgage payments remain elevated and high building costs that have kept prices high are expected to decline.

However, the remaining correction “is going to be a moderate one”, said Broyer.

The global house price decline has been generally milder than expected. Fitch now estimates nominal prices grew 6 per cent in the US last year, down from a previous forecast of up to a 5 per cent contraction, while in the UK it predicts a milder 2 per cent contraction in 2023 compared with a previous estimate of up to 7 per cent. The better forecasts are partly because high inflation hid the scale of the decline, economists said.

In some economies, including the US, Australia and the UK, the market has shown unexpected resilience and the house price correction has not wiped out the large gains seen during the coronavirus pandemic, either in nominal or real terms.

But in some countries outside the OECD the picture is different. In China, which has been experiencing an acute housing downturn, Fitch forecast house prices would continue to fall for the next two years, warning that investment demand “has mostly vanished” following a 7 per cent price contraction over the past two years.

Source: Financial Times

Emotional property mistakes that could cost you money

There’s no denying that buying and selling property can be an emotional process. Not only is there a lot of money at stake, but if you’re buying or selling your own family home, there are a lot of conflicting feelings and memories clouding your brain as well.

It’s important to remember that a real estate transaction is most likely the largest financial decision you will have to deal with. As such, it must be handled as a business transaction, and you should never let your heart dictate your choices.

There are several emotional traps you may fall into when dealing with real estate transactions. Here are some to watch out for.

Listening to your heart

Some people claim that about 90% of a purchasing decision is based on emotion and only 10% on logic when it comes to buying and selling family homes.

While this is understandable, it should be avoided. Listening to your heart rather than your head often results in overpaying for a property, rather than being patient and negotiating the best deal possible. This can get dangerous if you don’t have the financial approval for, or the means to cover, the agreed price.

Such emotional distraction can also be detrimental if you’re the vendor. While you may value certain features of your home above all else, potential buyers may not. So putting a premium on it because of your emotional investment won’t do you any favors.

Many vendors make the mistake of thinking their property is the most special and fantastic on the market. But remember, property prices have nothing to do with what you believe and what your emotions dictate; they’re a direct reflection of what is happening in the market and the broader economy.

This is also relevant when you’re facing an auction situation. It’s common for emotional buyers to get caught up in the moment and overbid for the property. Be careful of this. Set a maximum price you can afford, and do not go over it. If you can’t trust yourself, have someone neutral come with you to the auction with no ties to the property, so if it looks like you’re about to go over your limit, they can stop you.

Failing to plan

As they say, “when you fail to plan, you plan to fail.” And a lot of the time, we don’t plan simply because we are emotionally invested in the situation or outcome. But buying and selling property requires enormous planning! You need to set targets and goals, do your research on the selling and buying market, and investigate what options are out there for you.

There’s even planning to do when you finally settle on the property you want. You’ll need to organize inspections before you even attempt to think about purchasing the property. You’ll need to talk to your existing lender, or perhaps need to look elsewhere to find a better deal. You need to discuss contracts with your lawyer to make sure everything is in order. Purchasing a property on a whim means you won’t have this essential information to back you.

And that ignorance can be very costly.

Becoming too attached to a property

This goes for vendors and purchasers. When you’re too attached to your property as a vendor, you’ll likely have unrealistic expectations of the process and selling price. And this can lead to failure.

Being too attached to your property can lead to:

• Asking too high a price

• Ignoring market analysis of the surrounding area

• Thinking the property is perfect and ignoring the need to update things

• Being irrational when taking offers.

As a buyer, if you become too attached to a property, you run the risk of bidding too high at auction and ignoring the need to plan. It also potentially means you’ll be devastated if you don’t get the property, and make the continued search for your next home much harder.

Not considering offers properly

This mostly concerns vendors - the main thing you must remember is to consider every single offer as a serious offer. Often, it’s easy to take everything in the selling process personally, including an offer when it comes in. You need to remember that nothing about real estate transactions should be personal or emotional.

Potential purchasers will point out the flaws in your property, and will often start much lower than they’re willing to pay. And remember, receiving an offer (or multiple offers) means there are serious buyers out there.

Additionally, don’t ignore early offers. The most traction a property will receive is often in the first couple of weeks on market. If a potential purchaser is serious about the property it’s unlikely they will wait until auction, but rather put in an early offer to secure the property.

Don’t let your emotions sway you to think these offers aren’t serious, because they are. Listen to the offer and negotiate. Waiting for a better offer can seriously jeopardize your ability to sell your property because buyers may just walk away if you’re not open to negotiate.

Property dealings can be an emotional rollercoaster. Whether you’re selling or buying, it’s a big deal to buy or sell a home. But it’s important to remember that these are business deals, and letting emotions get in the way may have dire financial consequences.

Source: Ziggurat Real Estate

From Filthy Streets to the First Flush: A Brief History of Toilets

November 19: World Toilet Day

The humble toilet is an invention several millennia in the making. In ancient Egypt some 5,000 years ago, for example, rudimentary indoor toilet facilities were made available to citizens. Then the world’s first public sewage system appeared around 2,500 years ago in the ancient Pakistani city of Mohenjo-daro. But it wasn’t until 1449 that England’s first flushing toilet was installed.

Over the years, people have apparently done some of their best thinking while answering the call of nature. Martin Luther, the 16th-century father of the Protestant Reformation, once wrote that he had been on the toilet when the idea of ‘salvation by faith alone’ came to him. Whether it’s complex metaphysical dilemmas or scrolling social media, what we think about while we go is probably not the origins of the device we are sitting on.

So, here is a potted history of an essential convenience.

Ancient facilities

Around 5,000 years ago, ancient Egypt was already using toilet facilities to differentiate between the wealthy and the poor. Indoor toilets with limestone tops which sat over a pit of sand were a sign of high status. Poorer Egyptians used a wooden stool with a hole cut in the top. The oldest known example of a sewage system is believed to be the one found at the city of Mohenjo-daro (Mound of the Dead Men) in Pakistan. Around 2500 BC, Mohenjo-daro had brick toilets over a sewage system that took waste away to a cesspit outside the city. The drains were brick-lined, and archaeologists have even suggested there were sets of public toilets there. The city was destroyed suddenly around 1700 BC, and its innovations lost.

A row of ancient communal toilets in Ostia, Rome Image Credit: Fubar Obfusco via Wikimedia Commons / Public Domain

On the island of Crete, Minoans had toilets that used water to wash away waste, and in the 9th century BC, the Roman Empire began to develop both public toilets and sewer systems, spreading them across the empire. There were communal toilets, with a dozen or more holes in benches, where officials might conduct their business as they, well, conducted their business. There was still no such thing as toilet paper for the Romans though. They used a xylospongium, a sponge on the end of a stick that was rinsed and reused. Yuck. Medieval conveniences

Perhaps the most famous medieval toilet is the garderobe that can be seen in castles. Garderobes are so named because they were originally also used to store clothes and linen, since the ammonia helped to keep moths and pests away. Usually a narrow space built to jut into the outer wall of the castle, it was covered by a wooden plank with a circular hole cut into it (which might lead to embarrassing splinters).

The waste dropped down the wall, or into a moat, or to a purpose-dug hole beneath that was emptied regularly by the gong farmers, also known as the nightmen (which sounds like a band of vigilante heroes, but was far less exciting). The gong farmer was responsible for digging out and taking away the waste that gathered in cesspits in towns, cities and castles. Porchester Castle has garderobes built out over the sea so that the tide acted as a huge, natural flushing system.

A garderobe chute in the exterior wall of Peveril Castle, Derbyshire Image Credit: By Dave.Dunford - Transferred from en.wikipedia to Commons by Jalo using CommonsHelper., Public Domain

You might think these would be an unappealing method of entry into a castle, but for a strong-stomached attacker, they were a weak point. At Château Gaillard on the Norman border in 1204, the castle was breached by French soldiers who climbed up through garderobes. Guildford Castle was equipped with metal grates over the chutes later that century, perhaps in response to the events at Château Gaillard. Whittington’s Longhouse

Although they were not new, public toilets became increasingly important as populations grew, particularly in large cities. Richard Whittington, Lord Mayor of London and inspiration behind the pantomime story of Dick Whittington and his cat, wasn’t concerned in real life with London’s streets being paved with gold, but something else.

Whittington paid (either during his lifetime or by bequest in his will) for the creation of Whittington’s Longhouse, the first public toilet in London with separate provision for men and women, which opened on 1 May 1421. An almshouse was also founded, and Whittington was concerned to improve access to clean water in the city too. The Longhouse (which became a byword for the toilet) had 128 seats, half for men and half for women. It was located on Walbrook Street, which then had a brook that took the waste to a gully at the edge of the Thames where the tide washed it away twice a day. The Longhouse was still in use when the Great Fire of London destroyed it, though a new building was put in its place which remained in use until the early 20th century. The Great Stink

Problems with sanitation continued. The first flush toilet in England seems to have been installed by Thomas Brightfield in 1449. It consisted of a stone privy with a cistern fed by rainwater, and an overflow pipe.

The first detailed plan of a flushing toilet appeared in John Harrington’s 1596 Metamorphosis of Ajax. It was similar to Brightfield’s design, with a handle that could be turned to wash away the waste with water from a cistern. Harrington installed one for Elizabeth I at Richmond Palace, but the lack of a sewer network to complement the device meant it remained a novelty.

Problems with a lack of facilities continued for centuries. Even in royal circles, things were problematic. In Versailles Palace, for example, there were not enough toilets and courtiers would do their business in corridors and corners of rooms. Charles II’s court was renowned for leaving mess behind wherever they stayed: in corners, chimneys, coalhouses and cellars. In 1851, the Great Exhibition in London saw the first public flushing toilets that required a fee. Over 650,000 literally spent a penny during the exhibition, for which you could use the facilities, a towel, a comb and even get a shoe shine. Presumably not all at the same time.

Death rows the Thames claiming the lives of those who refuse to pay to clean up the river Image Credit: Punch Magazine, City and Water Blog via Wikimedia Commons / Public Domain

The most famous event that led to a wholesale overhaul of London’s sewer system and toilet facilities was the ‘Great Stink’ of summer 1858. The hot weather and vast amounts of human waste clogging the Thames created a foul smell and serious health fears.

When MPs almost abandoned Westminster, the government decided to act and added 1,100 miles (1,800km) of additional brick-lined sewers to increase the city’s capacity to deal with the waste it generated. For the most part, outside toilets remained the norm for a long time, and only in the second half of the 20th century did most houses begin to have inside toilets. So, next time you’re spending a penny and thinking, consider how the thing beneath you arrived there through the long, smelly history of the toilet.

Source: History Hit