Charts: Hong Kong Interbank Rates Rise

Source : HKAB and Bloomberg

Chart: China EV Sales to Passenger Vehicle Sales by City Size

Source : Bloomberg

Chart: China Housing Price Growth Weakens in May as Property Recovery Falters

Source : Bloomberg

Chart: Chinese Banks Cut Benchmark Lending Rates After PBOC Easing

Source : Bloomberg

U.S. Homeowner Equity Insights – Q1 2023

Introduction

The CoreLogic Homeowner Equity Insights report, is published quarterly with coverage at the national, state and metro level and includes negative equity share and average equity gains. The report features an interactive view of the data using digital maps to examine CoreLogic homeowner equity analysis through the first quarter of 2023.

Negative equity, often referred to as being “underwater” or “upside down,” applies to borrowers who owe more on their mortgages than their homes are worth. Negative equity can occur because of a decline in home value, an increase in mortgage debt or both.

This data only includes properties with a mortgage. Non-mortgaged properties (that are owned outright) are not included.

Homeowner Equity Q1 2023

CoreLogic analysis shows U.S. homeowners with mortgages (roughly 63% of all properties) saw their equity decrease by a total of $108.4 billion since the first quarter of 2022, a loss of 0.7% year over year.

In the first quarter of 2023, the total number of mortgaged residential properties with negative equity was unchanged from the fourth quarter of 2022 , representing 1.2 million homes, or 2.1% of all mortgaged properties. On a year-over-year basis, negative equity rose by 4% to 1.1 million homes, or 2% of all mortgaged properties, in the first quarter of 2023.

Because home equity is affected by home price changes, borrowers with equity positions near (+/- 5%) the negative equity cutoff are most likely to move out of or into negative equity as prices change, respectively. Looking at the first quarter of 2023 book of mortgages, if home prices increase by 5%, 145,000 homes would regain equity; if home prices decline by 5%, 213,000 would fall underwater. The CoreLogic HPI Forecast TM projects that home prices will increase by 4.6% from March 2023 to March 2024.

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Read more at Core Logic

Humour: News in Cartoon

Infographic: The Cities with the Best Work-Life Balance in the World

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Source : Visual Capitalist

China’s Big-City Homeowners Cash Out as Wealth Dream Fades

Chinese homeowners are losing conviction in their decades-long belief that property is a reliable store of wealth, undermining even coveted markets like Shanghai and adding pressure on authorities to find new sources of economic growth.

Asking prices in the financial hub have slumped for three straight months, falling to the lowest level since before China emerged from Covid lockdowns at the end of last year, according to data compiled by Centaline Group.

Despite surging inventory, transactions in the city tanked by one third to about 16,000 units in May compared with March, the Economic Observer reported this month.

Interviews with homeowners, real estate agents and analysts suggest the downturn has been fueled by waning faith that property will always be one of China’s safest investments.

While that shift in mindset has in some ways been welcomed by policy makers seeking to rein in speculative buying, the risk of a deeper-than-desired slump is rising at a time when the broader economy is losing momentum. Longer term, authorities may struggle to replace real estate as a key driver of growth and bulwark of the nation’s vast middle class.

“Selling pressure is really piling up here” in Shanghai, said Jun Li, chief investment officer at Power Sustainable (Shanghai) Investment Management, a Canadian financial firm. “It seems homeowners have reached a consensus that the market has peaked.”

Cashing Out

Song, a banker who recently sold his apartment in Shanghai’s prestigious Jing’an district for about 10 million yuan ($1.4 million), said he views this as one of the last windows to cash out of the property boom.

The 35-year-old still owns other properties in China with his family, but wants to reduce exposure to the sector due to expectations of property taxes and a prolonged slowdown in the sector. He asked to be identified by his last name for privacy reasons.

His experience is matched across the country. Existing home prices in 100 cities recorded the biggest decline in May since at least 2022, according to data compiled by real estate research firm China Index Academy.

“Shanghai has the most sluggish existing-home market in China right now,” said Yan Yuejin, a research director at E-house China Research and Development Institute. “Across the nation, supply and demand in the secondary market have also deteriorated.”

Homeowners in the southern metropolis of Shenzhen have cut prices to the lowest since October 2016, according to data compiled by Centaline Group.

People are seeking to sell due to concerns about the economic outlook, financing needs for cash-strapped businesses and unemployment, Li said.

In Hangzhou, the home base for Alibaba Group Holding Ltd., a seller in the suburbs cut asking prices by 17% after failing to find a buyer in six months, according to a housing agent surnamed Gong, who requested to be identified by her last name because she wasn’t authorized to speak publicly.

The weakening sentiment in China’s real estate sector is prompting policy makers to weigh new support measures to keep the economy afloat, Bloomberg reported this month.

Regulators are considering reducing down payments in some non-core neighborhoods of major cities, lowering agent commissions on transactions, and further relaxing restrictions for residential purchases.

Different Cycle

The days of roaring demand are unlikely to come back any time soon, according to Goldman Sachs Group Inc. analysts, who said China could experience an “L-shaped” real estate market.

This “cycle is different from previous rounds, as policymakers appear very determined not to use the property sector as a short-term stimulus tool,” Goldman analysts wrote in a June 11 note. “We believe the policy priority is to manage the multi-year slowdown rather than to engineer an up-cycle.”

Longer term, China is experiencing a structural shift due to its aging population, and limited scope for moving more people into cities. The country’s urbanization rate is expected to peak at about 75%, up from 64.7% in 2021 — all of which is weighing on sentiment.

Such pessimism is increasingly showing in Shanghai, as tough Covid measures in the last three years and weakening confidence in China’s economic outlook pushed homeowners and tenants — many of whom are expats — to pack and leave.

Shanghai Exodus

Favored by foreign companies, Shanghai was home to a quarter of China’s expatriate population before 2022. The city saw an exodus after the lockdown that kept nearly 25 million people confined to their homes for more than two months.

About 25% of Germans living in the city left in the fallout, while the number of French and Italian citizens registered with their governments each fell by 20%, according to a report by the Shanghai chapter of the European Union Chamber of Commerce early this year.

In Lianyang, a downtown neighborhood popular with expats and financiers in Shanghai, residential prices have slid 15% to 20% from record highs in mid-2021, according to a local property agent who asked to be identified by her surname Liu, because she wasn’t authorized to speak about the matter publicly.

Yi, a 31-year-old Shanghai resident, sold her suburban home in April for 4 million yuan, representing a steeper-than-expected 11% discount to her initial asking price. Second-hand inventory reached a record-high at 200,000 units that month, according to the Economic Observer.

She was in urgent need of cash and requested to be identified by her last name for privacy reasons. “It’s a buyers’ market now,” she said.

Source : BNN Bloomberg

Charts: IMD World Competitiveness Ranking 2023

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Source : IMD

With GM and Ford Embracing Tesla’s EV Charging Technology, Here’s What It Means for Consumers

Tom Krisher wrote . . . . . . . . .

Starting next year, owners of electric vehicles made by General Motors and Ford will be able to charge their EVs at many of Tesla’s charging stations, the largest such network in the country.

As part of their move, both Detroit-area automakers have decided to adopt Tesla’s EV charging connector, the plug that links an electric vehicle to a charging station.

With GM and Ford joining Tesla’s charging system, the rest of the auto industry may be forced follow suit. If so, it would provide a major victory to Tesla, which would be assured a new and guaranteed revenue stream for years to come.

At present, two main types of EV charging plugs exist: Tesla’s North American Charging Standard and CCS, used by nearly all other automakers. It’s not yet clear which other automakers might join Ford and GM.

WHAT’S GOING TO CHANGE?

With 17,000 charging plugs, Tesla commands the largest network in the United States. Its stations can charge faster than most others. They’re often more reliable, too, and exist in safer locations closer to prime travel corridors. Under the new agreements with GM and Ford, EVs from those companies will be able, starting next year, to charge at 12,000 Tesla Supercharger plugs. Tesla is the top seller of EVs in the U.S., with GM No. 2 and Ford No. 3. Because those three companies control so much of the EV market, analysts say other automakers are likely to sign up with with Tesla to avoid being left at a competitive disadvantage. “Do I want to have my customers not have access to Superchargers, and I’m going to charge them $100,000 for a vehicle?” said Gary Silberg, global head of automotive for KPMG.

WHAT HAPPENS IF I OWN A NON-TESLA EV?

If it’s made by GM or Ford, you will likely need to buy an adapter so you can hook into Tesla chargers. It’s unclear how much those will cost. You can also continue to charge on networks with CCS connectors. If your car is made by some other manufacturer, at this point you won’t have access to Tesla’s chargers. But there is a growing network of public stations equipped with CCS connectors — up to nearly 54,000 locations, with roughly 139,000 plugs, the Energy Department says. Still, only 7,400 such stations are DC fast chargers, which can provide a significant charge in just minutes.

WHAT HAPPENS IF I BUY A NON-TESLA EV IN THE FUTURE?

In 2025, GM and Ford say they will start installing ports in their new EVs that will be compatible with Tesla chargers. To use a CCS charger instead, you would need to have an adapter or find a charging station that can accommodate both technologies. Though other automakers will likely make the switch to Tesla’s system as well, for at least a few years, you’d probably need that adapter. “My guess is that what we will see is by 2027, there will probably be no more new EVs built for North America with CCS ports,” said Sam Abuelsamid, an analyst at Guidehouse Insights.

WHO IS THE BIG WINNER HERE?

GM and Ford didn’t release a lot of detail about the financial arrangements. But it’s clear that Tesla will enjoy a boost in revenue as more Ford and GM vehicles charge up. GM said it isn’t spending anything on the deal; its customers will pay Tesla to charge. GM and Ford EV owners also win because they will gain access to double the number of chargers that they had before.

WHO LOSES?

If other automakers go with Tesla, companies that are developing their own charging networks, such as ChargePoint, EVgo or Electrify America, would feel squeezed. They would have to make sure that all their fast chargers can work with the Tesla plug — or become more competitive by, for example, adding stations in better locations and making them more reliable. “Up to this point, they basically didn’t have to compete with Tesla for owners of CCS-equipped vehicles,” Abuelsamid noted. Because Tesla’s network is open to more vehicles, Silberg said, the other companies might struggle to attract investors. Yet as they adapt, consumers should gain more charging options. “It will light a fire under those companies,” he said.

WHAT DO OTHER AUTOMAKERS SAY ABOUT JOINING TESLA?

It varies. Kia, Nissan and Toyota declined to comment. Hyundai said it continues to evaluate its technology but has nothing to announce. Stellantis said it’s working on a response. Volkswagen says it’s committed to the CCS standard. Electrify America, which was established with money from a VW emissions cheating settlement, plans to double its number of chargers by 2026. It now has 840 stations and about 4,000 plugs.

Source : AP

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Read also at Reuters

EV maker Rivian to adopt Tesla’s charging standard . . . . .

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