The craziest stories about booming housing markets across the world

We can see real estate markets going crazy all over the world.

From Canada to Australia, the markets are booming. According to Knight Frank, home prices are skyrocketing at the fastest pace since 2006, with annual gains reaching double digits. The recent Bloomberg Economics analysis shows that red-hot markets have bubble signs that we haven’t seen since the time right before the financial crisis.

It looks like jaw-dropping stories are becoming a usual thing, for instance, when buyers offer to name their first-born after sellers, or shabby houses are sold for luxury real estate prices.

The reasons for such a tendency are quite obvious: cheap mortgages, a pandemic-caused desire for more space, remote workers taking city money to regional locations, and, of course, a fear that if you don’t purchase home now, you will miss this chance forever.

The regulators are getting nervous, but there are few signs of significant action in most countries. The market is expected to cool down on its own, as ten years of focus on higher lending standards combined with the possibility of a long period of low interest rates mean there is no obvious trigger for a market crash. The market activity is mostly driven by owner-occupiers and not investors. This category of buyers tends not to rush into selling when prices start falling.

In other words, we may see more crazy stories coming, and here are some of them.

Canada

Being a real estate agent, Kristin Cripps knew that Barrie is quite a hot market these days. This fast-growing city an hour and a half’s drive from Toronto has been showing extreme prices growth, as homebuyers are searching for larger properties or vacation real estate on scenic Lake Simcoe.

However, she still wasn’t ready for what happened when she decided to sell her one-bedroom vacation home. Cripps says it’s not a remarkable property. It looks like a small box. Nevertheless, during the first 24 hours, 192 showings were booked. The madness started.

Over the following three days, bidders and agents were showing up without permission, driving through severe cold and snow, knocking on the door, while Cripps conducted virtual viewings.

There were so many cars in the house’s small driveway, that about six cars ended up in a ditch. At the peak of the bidding war, Cripps was receiving about 75 emails every 20 minutes. She slept for only 2-3 hours a day just to keep up with all the emails. Overall, she received 71 official offers, and the property, initially listed for CUS$399,000, was sold for as much as CUS$777,777.

Australia

This house located almost 7 kilometers south of Sydney’s city center had no kitchen, no toilet, no power, no flooring and no paint. And still, this shabby property was sold for AUS$4.7 million (US$3.5 million), after an insane bidding war.

It’s only one of the numerous crazy sales in the city, where more than half the properties sold this year reached at least AUS$1 million price level. Quarterly growth to May was the largest in more than 30 years, and home prices rose by AUS$1,263 each day during the last spring month. Australia’s real estate market showed its best fiscal year since 2004.

U.S.

In case you want to purchase a property in Greenwich, Connecticut, you won’t be able to see it until you make an offer.

Once, a group of buyers, who didn’t get an appointment to view a just-listed US$1.55 million house, made an offer above asking price with the only condition to get inside the property before signing the deal.

“The offer was the highest so it was accepted, but they hadn’t even seen the house with their own eyes”, – says Mark Pruner, a broker with Berkshire Hathaway HomeServices in Greenwich. “And then, there were other people waiting for appointments each 15 minutes during two days.”

In April, the U.S. real estate prices reported the largest increase in 30 years, with even larger gains in case of suburban and rural areas.

U.K. 

Home purchase in U.K. is not an easy thing either. According to Hamptons International, about a quarter of properties here are sold during a week, and many of them don’t even appear at the real estate portals.

As a result, an old practice called gazumping became widespread once again. Sales deals in the U.K. are not officially closed until contracts are formally exchanged. It could take months after an offer was accepted. Meanwhile, a seller can accept another, more profitable offer, during this period.

China

Restraining housing speculation is a main task for the Chinese government, but it’s not that simple. Most other countries saw buyers switch to suburbs during the pandemic, while China moved in a different direction. The local buyers have rushed into the largest cities, where they could still find good jobs and schools.

In May, the annual prices increase reached 10.8%, even in spite of the fighting such loopholes as fake divorces, aimed at bypassing rules on the limited number of properties a family can have.

According to E-House (China) Enterprise Holdings Ltd., an apartment in Shenzhen costs 43.5 times a local’s average salary. The result is close to Hong Kong, which is considered to be the world’s least affordable city. With Shenzhen prices rising faster than in any other city of China, the list of challenges potential buyers face is growing.

For example, at one development in the city’s west, potential buyers had to temporarily transfer 1 million yuan (US$157,000) and provide personal credit reports before they could even make an offer.

In the end, many of those who did it (which was not easy because of the huge number of competitors), still didn’t even get their offers reviewed.

Following the calls of the local regulator for prioritizing residents, developer Coaster Group started checking applicants based on the period they’d paid taxes in the city. As a result, 2,114 successful applications had more than 23 years of tax history.