What have been the top housing markets in the world (London, Beijing, Sydney, New York and Toronto) are all suffering from the same ills…tax changes that dampen buyer demand, tougher lending standards and lack of affordability.
The International Monetary Fund (IMF) sees these ills as being borderless, as are all viruses, and that interconnectedness among countries is inescapable. In other words, the IMF sees that a downturn in one country in the world’s orbit could mean downturn threats to other country’s markets.
Let’s look at each country’s housing market to see if we find any connections:
The impact of Brexit has become real to many Londoners. The economy is slowing and prices are rising. In central London’s “best’ districts home prices have dropped -18% since 2014. Some homes within those districts have lost one third of their value, according to Saville Real Estate.
Meanwhile, developers continue to build record numbers of multimillion/pound luxury complexes in the midst of a chronic shortage of affordable homes. Sellers of properties within top tier pricing levels are hoping to “get ahead” of these ultra-lux developments coming onto the market by opting to “offload” their properties at reduced prices.
China’s crackdown on overheated property prices has frozen sales and left sellers in the lurch of the country’s recent downturn. Sales have been historically low during the first half of this year. New homes are being offered for less than existing home prices. Meanwhile, the city appears to be singularly focused on increasing rental supplies, affordable housing and government subsidized properties. The result…buyers are “waiting,” according to the China Real Estate Information Corporation, while prices spiral downward by 20%.
The “fear of missing out” (FOMO) is now past tense in Sydney. Prices, already the second most expensive in the world, have fallen over the last 10 months, according to CoreLogic. Market driving investors are finding it much more difficult to obtain credit as regulators have clamped down on lending practices. And, affordable housing, if at all existent, is tightly stretched.
Manhattan home sales fell -17% in Q2 2018 for the third straight quarter while prices rose +11% compared to Q2 2017. Some 4,600 newly build luxury apartments are coming onto the market this year and the upshot is falling prices. Median home values slid -7.5% in Quarter 2018. The bottom line for Manhattan buyers – They, like Beijing buyers, are waiting, picky and do NOT want to overpay
Despite nearly recovering from a deep dive after peak prices in April 2017, the Toronto housing market has dark clouds overhead. Continuing interest rate hikes and possibly escalating trade tensions with the US are making consumers more nervous than they’ve been in some years, according to the Toronto Real Estate Board. Demand continues to outpace supply despite government efforts to curb speculative and foreign buying.
Any of this sound familiar?