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Monday Market Memo | Global tourism thriving, housebuilders’ blues & bitcoin buyers
January 22, 2018Article by Paul Avery
TOURISTS DITCH TRUMP FOR THE MED
In a boon to the global hotel and holiday rental sector, international tourism grew at 7% in 2017, the fastest rate in seven years. The Mediterranean attracted 13% more overnight stays last year, dragging ‘mature region’ Europe back into the spotlight at 8% overall – a rate matched only by Africa, also with 8%. Asia-Pacific and the Middle East put in solid performances at 6% and 5% respectively. But the global laggard in this bumper year was the Americas. South America’s 7% increase was not enough to counterbalance the only major sub-region to post a decline in international arrivals… the United States.
TABLES TURN ON BIG UK HOUSEBUILDERS
After outperforming the market by around 30% last year, UK housebuilders began 2018 as the worst performers on the FTSE. With Persimmon’s deplorable bonus scandal and the collapse of ubiquitous contractor Carillion also dominating headlines, the construction industry is spending January out in the cold. Housebuilders are now faced with the decision not to extend Help to Buy subsidies past 2021 and a crackdown on land banking and leasehold sales, in addition to labour and materials pressures. Although this dreary picture is in some way reflects the recent slowdown in home values, what is less often discussed is its probable effect: tighter supply and higher prices.
PUNCTURE DOWN UNDER?
Following a pattern familiar to commonwealth peers Canada and the UK, Australia’s housing market appears ripe for a correction following decades of stonking growth, particularly in key cities. Sydney’s annual growth rate has fallen from 17% to 3.1% in a matter of months as an affordability crisis and high household debt break up the party. Yet the nation as a whole is unlikely to end its world-record 50-year streak. It is protected by incredibly tight supply, and awash with regional cities playing catch-up: Perth looks to have bottomed out, Canberra is stable as ever, and Hobart grew by 12.3% last year
Despite such extreme volatility that its value fell by almost 19% in a single day just last week, bitcoin is increasingly being used in property transactions. ‘Bitcoin accepted’ is now a common feature of real estate listings, especially in Florida, where one seller is exclusively accepting the cryptocurrency (33 BTC) in exchange for his Miami condo, but also in other US states, Dubai, and even New Zealand. The trend is likely driven by international investors seeking to sidestep capital controls and sanctions imposed on their home counties, though the motivation of the Miami seller is a mystery.
REPRIEVE FOR INDIA’S LARGEST MARKET
Property prices in Mumbai fell by an annualised 5% in the second half of 2017. In the city with the world’s third highest house price to income ratio (it would take 30 years for a median income family to buy a 970 sq. ft. apartment), the correction is a relief to many. Yet it is due largely to policy changes to which the market will soon acclimatise, while incoming migration of up to 1,000 people per day remains a torrential source of demand
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