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from Breakingviews:

REIT scandal could be good test for Sarbanes-Oxley

By Reynolds Holding

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

A scandal at one of America’s biggest real-estate investment trusts could be the perfect test for the Sarbanes-Oxley Act. American Realty Capital Properties’ stock tanked nearly 20 percent on Wednesday after the company said mistakes in its financial statements were intentionally left uncorrected. That sounds tailor-made for a case under the often-ignored law inspired by Enron, WorldCom and other accounting debacles.

An appeal now before the U.S. Supreme Court suggests how low SarbOx has fallen. The case involves a fisherman convicted of violating the law’s ban on destroying potential evidence by tossing overboard several under-sized grouper. His defense sounds persuasive: The 2002 statute was aimed at financial records, not sea creatures.

SarbOx has never received much respect. Companies persistently gripe that it deters them from going public and drives business overseas. But several recent studies credit the law with improving disclosure, cutting down on financial restatements and lowering companies’ cost of capital.

from Breakingviews:

Real estate rescue may not help China’s developers

By John Foley

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

If you cheapen it, they will come. China’s large real estate companies are going all-out to shift their properties, aided by recent reductions in mortgage rates and the relaxation of local restrictions on who can buy. When developers sell more for less, however, there is grief ahead.

from Breakingviews:

China’s Agile Property only the worst of the best

By John Foley

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Agile Property is crumbling. The Chinese real estate developer needs urgent financial assistance after the authorities detained its chairman and it had to cancel a $360 million rights issue. The shares fell by as much as 30 percent on Oct. 13. Yet in China’s property sector, it is just the worst of the best.

from Breakingviews:

China house prices on brink of pessimism spiral

By John Foley

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

China is rare in many ways, but its housing market is just as dependent on psychology as everywhere else. After years of gains, prices are now falling in most Chinese major cities.  When negative thinking sets in, it’s hard to escape the pessimism spiral.

from Counterparties:

Halfway homes?

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The American housing market is looking better. That’s not entirely surprising, given that there was nowhere to go but up after the big bust of 2008. Some indicators — the number of housing starts, for instance — look quite healthy. But a team of researchers from the New York Fed, looking over a treasure trove of new data on the benefits and drawbacks of homeownership, have concluded that the divide between owners and renters is still one of the biggest fault lines in America.

Over the last nine years, the percentage of Americans who own their own homes, typically a marker of middle-class respectability, has fallen from 69 to 65 percent. Moreover, sales of both new and existing homes were about 5 percent lower over the first half of 2014 than over the first half of 2013. There is vigorous debate over why this is the case. The Fed researchers write that the main reasons preventing renters from becoming owners “are weak balance sheets (low savings or high debt), low income, and lack of access to credit.” Lack of desire to own a home doesn’t really factor into it. Nick Timiraos concurs, “The good news from the standpoint of the real-estate industry is that there’s less evidence of a structural shift in Americans’ preference for owning homes.”

from Breakingviews:

London real estate at an inflection point

By George Hay

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Most real estate valuers in London think property prices in the UK capital are about to fall. That prediction has been easy to make and easier to get wrong in the last five years. This time, the evidence that global investors’ favourite housing market has peaked is looking credible.

from Expert Zone:

When are house prices a worry?

(Any opinions expressed here are those of the author and not of Thomson Reuters)

As I speak with a relatively recognizable British accent, travelling by taxi in many Asian countries has become something of a trial in recent years. Whenever my nationality is recognized, I am (courteously) asked for my views on the London property market, and where to buy. In a world of low interest rates, property has become increasingly fashionable, and somehow housing advice delivered in a British accent has become highly sought after.

The development of One Hyde Park is seen in LondonProperty prices in London are now over 30 percent above their pre-crisis level. For the rest of the UK, house prices are now back where they were before the onset of the economic crisis (it should be noted that the economy is around 13 percent larger in nominal terms over the same period, so the house price to GDP ratio has fallen for the country as a whole). In the United States, house prices have yet to regain their pre-crash levels, but they are up 20 percent from their lows. Even in the Euro area, not an economy noted for its vibrancy, German property prices are 10 percent higher than they were before the crisis.

from Edward Hadas:

Housing, the ultimate momentum trade

What will happen next in the housing market? The question comes up all the time in many countries, for an obvious reason: house prices jump around too fast for the good of the economy.

The price hyperactivity does not follow a uniform pattern around the world. Look at the indices of average prices for dwellings by nation, adjusted for inflation, compiled by the Bank for International Settlements. Since 2000, the real average price is up by 63 percent in the UK, by 49 percent in Switzerland and by 12 percent in the United States. The average Dutch price declined by 7 percent. In Germany, though, there has been so little house price action that BIS could only find data back to 2003. Since then, the average German price is down by a tiny 1 percent in real terms.

from Breakingviews:

U.S. home affordability on way to lowest in years

By Daniel Indiviglio and Richard Beales

The authors are Reuters Breakingviews columnists. The opinions expressed are their own.

U.S. homes may soon be as unaffordable as they have been in decades. With the Federal Reserve set to raise interest rates, house prices rising and incomes not keeping pace, the dream of home ownership – cheaper after the 2008 downturn – is receding again for many. A new Breakingviews calculator shows that by 2017 homebuyers may have to stretch once again.

from Breakingviews:

Can sterling hit $2? Only with a perfect storm

By Swaha Pattanaik

The author is a Reuters Breakingviews columnist. The opinions expressed are her own. 

Sterling has touched $1.70 and is on the brink of bursting ranges which have confined it for five years. Could a resurgent pound return to pre-crisis levels of $2?

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