mfioretti: housing*

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  1. From next year, developers will be charged a tax for unsold units that haven’t been occupied for over a year, Nidhi Adlakha writes

    In the Union Budget 2017, it was announced that the IT department will soon levy a tax on unsold apartments, which have been vacant for more than one year. With industry sources anticipating the order will be executed as early as April 2018 onwards, industry players are in a fix.

    A. Shankar, National Director, JLL India, says certain builders adopt the ‘hoarding’ strategy to create artificial scarcity and this leads to inflated prices. “The fresh tax would be applicable from the next financial year and will be levied on properties held under ‘stock-in-trade’ by developers. The tax rate could be anywhere between 8% and 10% of property's total value,” he says.

    It’s evident the government wants developers to stop hoarding apartments in anticipation of price appreciation, but there are a number of practical issues with the new tax regime, feels Niranjan Hiranandani, President, National Real Estate Development Council (NAREDCO). He says buyers do not wait in line and buy housing units as and when they are available. There are market forces which impact the sale of ready units and most importantly, the prevailing economic conditions affect buyer sentiment. “Developers have no control over any of these aspects and cannot ensure that ready possession units get sold within this one year deadline,” he says.


    Developers might be significantly impacted by the move but consumers have a lot to look forward to.

    With the current vacant supply hitting the market soon, buyers can expect a reduction in prices. In cities such as Delhi-NCR and Mumbai, unsold inventory levels are very high and the new tax could result in a steep price correction, says Shankar. Other benefits include: a reduction in unsold inventory, lower prices, increased government revenue, opportunity for alternate asset classes such as co-living and rental housing and overall price corrections.


    Most players believe that the timing for such a move is unfortunate. Contrary to the belief that developers are hoarding, they say, they are struggling to sell properties even at reduced prices. “Builders are making a loss in whatever they are selling today and are struggling to pay back the loans with high interest rates,” says R Kumar, Managing Director & Chairman – Navin’s.

    If unsold properties are going to be taxed, developers will hesitate to launch new projects unless there is a sale guarantee. RERA stipulates that properties cannot be sold without all approvals in place and even after getting all the necessary documents, if only a few units are sold, the builder has to complete the entire project. Added to that is the pressure of paying tax on the unsold units. How is this fair? asks Kumar.

    Speaking on similar lines, Hiranandani wonders that if builders are unable to sell at prevailing points, are they expected to sell at a loss? “If such a scenario is envisaged, will developers want to build housing units unless they have committed buyers?”

    Given the new rule, developers may slowdown their construction speed to match with the sales velocity. At the onset, such an IT directive may not be completely in favour of the free-market regime that the government intends to achieve within the sector. “In the short run, this could result in a price correction but in the long run, developers might be hesitant to undertake large township-style projects,” adds Shankar. Also, new supply will be only bought-in once demand for it has been registered.

    More competitors

    Instead, the entry of more competitors should be encouraged (many weak/fraudulent ones have been wiped out post-RERA). The consistent release of land parcels and faster project approvals to create supply is crucial. Ravi Ahuja, Senior Executive Director, Mumbai & Developer Services, Colliers International India, says in most cases, any additional outflow from the developer’s end on any project, ultimately impacts the buyer. In the current scenario, however, where the residential sector is reeling under pressure, he feels the new move will not result in any price increase.

    Trends indicate that apart from affordable units, the luxury segment witnesses maximum launches. But given this new tax segment, one can expect fewer launches and perhaps an invite-only sale process. The luxury sector, the most impacted asset class, will see few takers in the coming months.

    Data suggests that a considerable portion of unsold units currently lie in the premium and luxury segment. The tax initiative will impact new supply to a great extent as developers will be wary of constructing prior to witnessing healthy demand.
    Tags: , , by M. Fioretti (2017-12-28)
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  2. The Moladi construction system replaces the cumbersome bricklaying process with an approach akin to injection moulding. Workers erect the building’s frame with reusable plastic panels, leaving wall cavities which — once the windows, doors, wiring and pipework have been put in — are filled with a fast-setting, aerated mortar.

    The building process can be monitored by just one qualified supervisor who manages local workmen with no prior construction experience or skills.

    The first project, Kibaha District Courthouse, was built for $250 per square metre, which is half the cost of conventional methods. It took six months to complete when it might typically have taken up to three years using traditional methods. On the back of this success, the Tanzanian government has committed to building another 11 district courthouses using this method.
    Tags: , by M. Fioretti (2017-03-05)
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  3. By the time of Germany’s unconditional surrender in May 1945, 20% of Germany’s housing stock was rubble. Some 2.25 million homes were gone. Another 2 million were damaged. A 1946 census showed an additional 5.5 million housing units were needed in what would ultimately become West Germany.

    Germany’s housing wasn’t the only thing in tatters. The economy was a heap. Financing was nil and the currency was virtually worthless. (People bartered.) If Germans were going to have places to live, some sort of government program was the only way to build them.

    And don’t forget, the political situation in post-war Germany was still quite tense. Leaders worried about a re-radicalization of the populace, perhaps even a comeback for fascism. Communism loomed as an even larger threat, with so much unemployment.

    West Germany’s first housing minister—a former Wehrmacht man by the name of Eberhard Wildermuth—once noted that “the number of communist voters in European countries stands in inverse proportion to the number of housing units per thousand inhabitants.”

    A housing program would simultaneously put people back to work and reduce the stress of the housing crunch. Because of such political worries—as well as genuine, widespread need—West Germany designed its housing policy to benefit as broad a chunk of the population as possible.
    Tags: , , by M. Fioretti (2016-09-21)
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  4. f you’ve been to a conference in the past 12 months – you’ll almost certainly have seen the slide above, or a version of it.

    Mentioning “disruptive innovation” adds a sprinkle of sophistication to otherwise ordinary presentations. It’s a sit up and take notice slide that says: ‘Better listen, or you could be history.”

    However – it doesn’t always hit its intended target. A significant portion of the audience at a couple of events I’ve been to recently have looked at each other as if to say ‘that couldn’t happen to us’.

    The reason for this seems to be the comfort blanket that can come with extended working in the public and social sectors.

    The thinking can go like this.

    We are different.
    We deal with people who are highly complex with multiple needs and vulnerabilities.
    No tech outfit could hope to understand the extent of the personalisation involved in our services.

    It’s optimistic thinking – probably the same that was held by some taxi firms pre-Uber and hotels before Airbnb.

    It’s going to take radical change a lot closer to home before many managers recognise how profoundly the rules of business have changed in the digital age.

    Arguably though , it’s already happening. I’ve made a slide of my own that might be more relevant to the public sector.

    Far from fantasy – we are at the beginning of the end of one size fits all health, housing and social care monopolies.

    Some examples:
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  5. China’s real estate market has induced confusion in many of the financial circles of the world due its seemingly volatile nature: prices rising to unsustainable heights just to drop a little before shooting back up again, over and over without ever really crashing. The fact of the matter is that an over-inflated housing market is one of the biggest cash cows the Chinese government has, so the last thing they want are plummeting prices. Taxes and fees can account for upwards of 60% of a house’s final price, not to mention the spoils that are derived from selling land to developers.

    “With one hand on a patchwork of controls aimed at taming record house prices, governments with their other hand are at the same time selling land to developers at rising prices,” wrote Xiaoyi Shao and Koh Gui Qing for Reuters.

    When looking at China’s housing market one key point to remember is that this isn’t really a free market and can’t be expected to behave like one. Behind the scenes are governmental ventriloquists pulling at proverbial strings, controlling supply and engineering just the right amount of demand.
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  6. Couchsurfing ha coinvolto 3 milioni di persone nel mondo, Bikesharing 2.2 milioni di bici al mese nel 2011, Carsharing 3.3 miliardi nel 2013, Airbnb 25 milioni di ospiti nel 2014. Ancora non esiste una normativa Ue in materia di sharing economy e anche la ricerca a supporto di una politica comune a riguardo è quasi inesistente. La sharing economy rappresenta ancora l'1% dell'economia formale, in molti casi rappresenta di fatto lo step iniziale per approdare poi ad un economia convenzionale quando non finisce per sostituirla in alcune sue parti, secondo l'analisi.
    Tags: , , , , , by M. Fioretti (2015-12-23)
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  7. The stubborn unwillingness of millennials to buy cars and houses and save for pensions may reflect a shifting consciousness about material culture, but can also be attributed to the undeniable fact that young people have no money.

    As Derek Thompson pointed out a year ago in The Atlantic, gains from the "recovery" since the crash have been extremely lopsided: almost all of that money has gone to rich people, with some trickle-down to older middle-class workers. For workers aged 18-24, wages have steadily decreased in real terms.

    The fact that young people have no money to spend on cars and houses and pensions doesn't mean that they're not reconsidering their relationship with those staples of the American Dream, but it does explain why that reconsideration is taking place.

    First: Why are real wages falling across so many fields for young workers? The Great Recession devastated demand for hotels, amusement parks, and many restaurants, which explains the collapse in pay across those industries. As the ranks of young unemployed and underemployed Millennials pile up, companies around the country know they can attract applicants without raising starter wages.

    But there's something deeper, too. The familiar bash brothers of globalization and technology (particularly information technology) have conspired to gut middle-class jobs by sending work abroad or replacing it with automation and software. A 2013 study by David Autor, David Dorn, and Gordon Hanson found that although the computerization of certain tasks hasn't reduced employment, it has reduced the number of decent-paying, routine-heavy jobs. Cheaper jobs have replaced them, and overall pay has declined.
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  8. Il modello di casa 'trasferibile' o 'traslocabile' ha ispirato il team che ha progettato Kasita, un mini-appartamento di appena 19 metri quadri (poco più grandi di un container) dentro i quali sono riusciti a incastrare proprio tutto, merito di un approccio davvero 'smart' nella sistemazione degli spazi e dell'arredamento interno. La peculiarità di questo tipo di abitazioni è però un'altra: i Kasita possono essere impilati uno sull'altro per formare un piccolo palazzo di qualche piano. Se si ha l'esigenza di cambiare città, il modulo viene estratto e trasportato con un camion alla nuova destinazione e andrà a far parte di un'altra 'pila' di Kasita. Il progetto è in una fase piuttosto avanzata, pensato per i "millennials" giovani, studenti, single e professionisti che vogliono abitare in centro ma non possono permettersi di acquistare o pagare un affitto stellare. I prezzi (ancora non resi noti dagli ideatori) dovrebbero essere quindi piuttosto contenuti. Complessi di Kasita dovrebbe fare la loro prima comparsa ad Austin, in Texas, nel 2016 e in diverse grandi città degli Stati Uniti a partire dall'anno successivo
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  9. Owning a home no longer plays the same role in the lives of Americans that it has in the past. And it is clear that many middle-income Americans cannot realistically aspire to become homeowners anytime soon.

    Until recently, Americans felt they had achieved financial success if they owned a home, could put their children through college, had secure and stable retirement income and had upward mobility. However, recent polls and surveys suggest that, for many Americans, homeownership is no longer a core component of the American Dream.

    A recent survey found that most Americans are now more concerned about having enough money to retire comfortably than about becoming a homeowner.

    Americans born between the early 1980s and early 2000s account for about 60% of student debt, yet they do not have higher wages to repay it. The Standard & Poor’s report notes that, since the end of the recession, student debt has surged at a pace more than six times that of hourly wages.

    Most wage gains since 1979 have gone to the highest-paid workers, while wages for middle- and lower-income workers have barely kept pace with inflation, according to the Economic Policy Institute, a nonpartisan think tank
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  10. The National Low-Income Housing Coalition has released a new report with a startling fact: According to Vox, “There is no state in the union where a full-time, minimum-wage worker can afford to rent a one-bedroom apartment for less than 30 percent of his paycheck (which is a standard measure of housing affordability).”

    Vox has a full break down of the report, which tallies the number of hours minimum wage employees need to work in order to rent a one-bedroom place with 30 percent of their income. While some state averages come close to a 40-hour work week, the number is astronomical in others. Minimum wage employees in California need to work 92 hours a week to comfortably afford housing, New Yorkers need to average 98 hours, and New Jerseyans must complete a whopping 100 hours a week.

    Of course these are all state averages and the reality of rental costs and city minimum wages may differ in specific areas. But across the board, increases in rental prices tend to be higher than increases in the minimum wage.
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