Real estate back on recovery path: Survey

2/11/2018

The sales volume witnessed growth in cities such as Pune, Mumbai and Bengaluru on the back of price corrections.

With the real estate market beginning to adjust to various reforms like demonetisation, GST and RERA, most Indian metros witnessed recovery with sales improving, while property prices corrected or maintained status-quo, a survey said.
According to the survey by property portal 99acres.com, most of the metros saw average property prices either dipping or remaining flat, while overall sales improved in a few markets.
The sales volume witnessed growth in cities such as Pune, Mumbai and Bengaluru on the back of price corrections.

While Hyderabad and Kolkata saw rentals increasing by 4 per cent each during the October-December 2017 quarter as compared to the same period in 2016, Bengaluru and Mumbai recorded 3 per cent hike.

The report said the inventory-heavy markets of Delhi NCR and Mumbai witnessed corrections in some popular housing pockets of Gurgaon, Noida and Navi Mumbai.
"The real estate industry underwent some of the most radical reforms and avant-garde policy changes in 2017. Residential demand, sales and supply took a hit on the back of uncertainties surrounding RERA and GST.
"While the first half of 2017 was testimony to plummeting numbers, the second half saw stakeholders in a contemplative mode," 99acres.com Chief Business Officer Narasimha Jayakumar said.
He said the buyers waited for RERA to unfurl its full impact on property prices and builders were seen acclimatising to the new norms.
"RERA transformed the market from uncertain to mended buyer confidence during the quarter. Enquiries and sales improved marginally across cities. The premium market also saw enhanced traction in cities such as Bengaluru and Pune, suggesting an impending revival. With improving clarity on GST, sales are expected to revive across categories and budget segments," Jayakumar said.
The report further pointed out that price growth remained restricted across metros with inventory-heavy markets of Delhi NCR and Mumbai witnessing corrections in some popular housing pockets.
"Prices may further dip in luxury and ultra-luxury segments in 2018 because of low buyer appetite for such projects. Other categories are, however, unlikely to see any major correction in January-March 2018," the report said.
On the supply side, the report said the saleable supply in the primary market appears low on account of slow-paced registrations under RERA.
"Fresh inventory levels may soar in the ensuing quarters owing to increased registrations and new launches on the back of clarity in the norms," it said.

 

Sweden’s Economic Boom Revisited

Sweden’s economy faces slowest per-capita growth in more than three decades
There's less than meets the eye to Sweden's economic boom.
The largest Nordic economy has been outpacing most of Europe in recent years, helped by booming domestic demand and rising exports. But under the surface, the growth is a lot less impressive and looking ahead prospects looks positively gloomy.
That’s because the expansion has been inflated by massive population growth, triggered by record immigration and high birth rates. In fact, the difference between overall growth in gross domestic product and growth when measured per capita hasn't been as wide since at least 1950.

Spread Widens

The difference between growth and per capita growth is getting bigger

Source: Statistics Sweden

To avoid slipping into a period of historically weak growth, economists say Sweden must make profound structural changes in areas such as education, the housing rental market, taxes and improve productivity. It also needs to ensure that the hundreds of thousands of immigrants from countries such as Syria and Iraq that arrived in the past few years find their way into the labor market.
“The problem is not a lack of knowledge, but that the economic-politic discussion isn’t centered around Sweden’s long-term growth,” says John Hassler, a professor of economics at Stockholm University.

In 2016, GDP growth was 3.2 percent while per capita growth was just 2.0 percent. Looking ahead, it could get worse. Real per capita growth is seen averaging just 1 percent in the decade through 2026, according to the Swedish National Institute of Economic Research. That's down from 1.8 percent in the decade that ended 2016 and from 3.4 percent in the prior 10-year period.
But the NIER cautions against getting too gloomy. A big reason for the drop is due to a large wave of people retiring. These people have savings and will be able to keep up consumption, according to Ylva Heden Westerdahl,  the NIER’s director of forecasting.
It therefore gets better when you look at consumption per capita over the next years.

Holding Up

Growth in consumption per capita is seen steady or higher even as GDP per capita growth slows

Source: National Instistue of Economic Research

Change in per capita consumption, 5-year moving average

Australia is to hold a royal commission into the finance industry

2/08/2018

In what looks like a climb-down by the prime minister, scandal-plagued banks will be probed for alleged misconduct

MALCOLM TURNBULL, Australia’s prime minister, has changed his tune. Just last week he dismissed calls for an inquiry into Australia’s banks, saying it would be an expensive exercise that “doesn’t do anything other than write a report”. But on November 30th, Mr Turnbull abruptly announced a royal commission, Australia’s most wide-ranging form of inquiry, into “alleged misconduct” not just by banks but in other financial services as well.
Only hours earlier, Australia’s four biggest banks—the Australia and New Zealand Banking Group, the Commonwealth Bank of Australia, the National Australia Bank and Westpac Banking Corporation—had themselves called for an inquiry. Their chairmen and chief executives wrote to the federal government asking for an inquiry to end uncertainty and “restore trust, respect and confidence”.

Australia weathered the financial crisis a decade ago without a recession—indeed in 2018 it is poised to enter its 27th consecutive year of unbroken expansion. Its resilience was seen as, in part, a consequence of sound banking regulation. But in recent years, a series of scandals has fed a different image. The press has exposed stories of customers losing savings after following poor financial advice from banks. Many Australians have come to see banks as pursuers of big profits and fat executive salaries at the expense of service to ordinary customers. In August the Commonwealth Bank faced accusations from a regulator of turning a blind eye to money-laundering through its deposit machines. This only heightened calls for an inquiry into the entire industry.
The banks’ call for one came after political pressure had been mounting on Mr Turnbull’s conservative coalition government. Barry O’Sullivan, a federal senator from the rural-based National Party, the coalition’s junior partner, had threatened to introduce a private member’s bill for a parliamentary commission of inquiry. Its powers would not be as broad as those of a royal commission. The Labor opposition, the Australian Greens and independents had offered support, ensuring it would pass the Senate. That left Mr Turnbull politically vulnerable. He survives in the lower house with a one-seat majority. He could have lost that if rebellious Nationals there had helped to pass the bill, too.
By writing to the government as this political drama flared, the banks seemed to have seized the high ground. Political uncertainty, they said, was “hurting confidence in our financial-services system, including in offshore markets”. It also risked “undermining the critical perception that our banks are unquestionably strong”.
After the banks’ intervention, Mr Turnbull appeared at a press conference in Canberra with Scott Morrison, the treasurer. He called the decision to call the royal commission a “regrettable but necessary” one. Echoing the banks, he said that uncertainty about an inquiry was “starting to undermine confidence in our financial system and, as a result, the national economy”. The Royal Commission into Misconduct in the Financial Services Industry (as it is called) will be headed by a judge, or a former judge, yet to be appointed, cost A$75m ($57m) and will be expected to report in February 2019.
Mr Turnbull, himself a former banker who once headed Goldman Sachs in Australia, showed a touch of defensiveness over the apparent climb-down. He said the inquiry would not be putting “capitalism on trial”, nor should banks be used as “political football”. They were the “bedrock of the economy”, employing more than 200,000 people.
Mr Turnbull says the royal commission will ensure a “responsible but comprehensive” investigation into how financial institutions have dealt with past misconduct, and whether those cases expose “cultural and governance issues”. Pension funds, insurance companies and other wealth managers will be included.
The Labor opposition had already promised to hold a royal commission if elected. The government had tried to head off this pressure by showing it understood people’s grievances. When he spoke at an event to mark Westpac’s bicentenary last year, Mr Turnbull turned on banks, saying they should “put their customers’ interests first”. In its budget last May, the government imposed a levy on Australia’s five biggest banks to raise about A$1.5bn a year. Now that he has been unable to avoid an inquiry any longer, Mr Turnbull will have to prepare for the potential political fallout from having put it off. The bankers must brace themselves too. One senior financial-industry executive predicts the inquiry will be an “unpleasant experience”.

MobiKwik unveils Magic

Mobile wallet firm MobiKwik has announced the introduction of Magic, a digital platform for seamless and paperless processing and transfer of rewards and reimbursements to employees working in the corporate sector.
The product offering includes employee benefits such as reimbursement for food, fuel, medical, phone, LTA and other company benefits. These will be accessible for both corporates and employees on a MobiKwik app.
The company said the employee benefit and reimbursement industry in India, estimated at ₹51,600 crore and is largely paper- based.
“With Magic, we are introducing a technology solution that will ease corporate processes, thereby simplifying the lives of million of employees in India. Magic makes the disbursal of employee benefits fast, simple and more efficient,” said Bipin Preet Singh, co-founder & CEO, MobiKwik in Mumbai.
“We aim to eliminate the estimated processing cost of ₹6 crore for organisations and benefit over 5 million users by 2020 thus achieving a revenue of ₹8,400 crore,” he added.

Bitcoin drops below $6,200 for first time in three months

Bitcoin plunged 20% to a three-month low today, its latest sharp loss following a series of setbacks for the cryptocurrency that, with a collapse across global mainstream markets adding to the selling.
The virtual currency fell to $6,190 for the first time since mid-November, according to Bloomberg News, and represents the latest hammering for a unit that saw a stratospheric 26-fold rise last year.
Today’s collapse comes just six weeks after bitcoin hit a record high of $19,511, fuelled by a flood of speculators looking to make a quick buck, with warnings it could fall another 50 per cent.
Since those heady days the cryptomarket — which includes dozens of other units — has been pounded by news of crackdowns by governments including in China, Russia and South Korea, one of the biggest markets for the sector.
On Thursday, India said it would “take all measures to eliminate” cryptocurrencies’ use as part of a payment system and in funding illegitimate activities, while Japanese authorities raided a virtual currency exchange after it lost $530 million to hackers.
Central bank in Europe, Japan and the United States have also flagged concerns about the unit and this week saw several commercial lenders say they would stop allowing their customers to buy bitcoin through their credit cards owing to debt concerns.
Stephen Innes, head of trading for Asia Pacific at Oanda, said “the dynamics behind the moves are regulatory clampdowns and investors losing confidence in crypto”.
The sell-off on Tuesday was exacerbated by crushing losses on world stock markets, with the Dow on Wall Street suffering its biggest one-day points loss and wiping out all its 2018 gains.
The global rout comes as panicked investors fret over rising US borrowing costs, leading them to cash in profits after a stellar couple of months that have seen many indexes hit record or all-time highs.
Equities have enjoyed months of surges fuelled by optimism over the US economy, corporate earnings and the global outlook.
But while traders have been piling into equities, pushing many global indexes to record or multi-year highs, there has been growing concern on trading floors about elevated US Treasury bond yields — at four-year highs — and the likelihood of fresh Federal Reserve interest rate hikes.
“The risk-off tone is hitting Bitcoin almost as hard as a global regulator and bank scrutiny,” said Greg McKenna, chief market strategist at AxiTrader. “The latest dent to the Cryptospace has been banks saying they are shutting down the ability of clients to buy bitcoin with their cards.”
“This could end up a full round trip back into the $1,850/$2,966 region.”

Higher MSPs for farmers won’t accelerate inflation: analysts

Non-perishable agri products may see slight price rise till MSPs come into effect

The announcement of a Minimum Support Price (MSP) of 1.5 times the farmer’s cost will likely not have a strong upward impact on overall inflation but could spur a waning of the sharp slowdown in food price gains seen in 2017, according to officials and economists.
In the short term, a slight increase in prices of non-perishable farm products is possible as producers hold on to produce till the higher MSPs come into effect around September or October. The increase in MSPs would come into effect when the Kharif crop came into the market, Economic Affairs Secretary Subhash Chandra Garg had told The Hindu, adding he did not expect any impact in the first six months. However, there was the possibility of an induced effect as farmers held stocks in expectation of a higher price, he said.
Price expectations
Farmers would hold on to crops only if current prices were lower than 1.5 times the cost of production, economists said, adding that the inflationary impact of higher MSPs would be felt only if food prices fall fell below that level. “If prices are currently depressed and we know that in the future it will be 1.5 times the cost, then the prices may start going up right now,” said Ranen Banerjee, partner and leader - Public Finance and Economics at PwC India. “The non-perishable products, and those that can be stored, will be held till that time.”
Food inflation decelerated in 2017 at both the wholesale and retail levels. The ‘food and beverages’ category of the Consumer Price Index went from a strong growth of 7.2% in May 2016 to a contraction of 0.2% in May 2017. Similarly, the food part of the primary articles segment of the Wholesale Price Index went from a growth of 6.82% to a contraction of 2.13% over the same period. These plummeting prices due to excess supply had hurt farmers, forcing the government to act.
The nature of MSPs and the fact that government has limited funds to use to buy crops at that price, would contain inflationary expectations, said D.K. Srivastava, Chief Policy Advisor at EY India.
“MSPs don’t come into effect until market prices dip. And even if they dip, government’s ability to purchase at MSP is based on budget allocation. Currently, only limited purchases are done due to budget and quality considerations. If all the crops were to be bought, then the budgetary allocation would have to be much higher,” he said.
Mr. Banerjee added that due to this nature of MSPs, that they kick in only when market prices dip, the upward effect on inflation may be limited, but now even the sharp downward trend seen in the middle of 2017 will no longer take place.
“It is not necessarily going to have a higher inflationary effect,” Mr. Banerjee said. “But yes, there won’t be a sharp downward movement or drop in prices.”

What does mining a bitcoin really mean?

Bitcoin mining explained

2017 was the year when curiosity about the Bitcoin hit an all-time high, thanks largely to a dramatic surge in its value. Notwithstanding recent fluctuations in its price, interest remains strong in the original cryptocurrency, which was launched in 2009.

One question everybody has is what is the process of 'mining' that creates new Bitcoins and how does the blockchain technology underpinning the cryptocurrency really work. Here's how...

Making of the coin

Bitcoins are generated by a mathematical formula, or algorithm. It started with 50 coins in Jan 2009, the formula produces batches of new coins every 10 minutes.

These coins can be 'mined' by anyone willing to dedicate computing power.

Then it goes public

The blockchain forms a permanent, publicly available history of every bitcoin transaction.

Miners get more

Miners are rewarded for their work with new bitcoins automatically generated by the bitcoin algorithm.

Is there a mining limit?

The bitcoin formula sets a limit of 21 million coins. This limit is expected to be reached around the year 2140.