Global real estate is slowing down says report

by Steve Randall04 Jan 2019

The downturn in the real estate market in Vancouver over the past year has been exacerbated by several factors including mortgage restrictions, interest rates, and affordability. But there is a wider issue in play.

Global real estate markets are slowing down according to analysts in Asia who are now also seeing weaker conditions in large cities including Sydney and Hong Kong. This adds to weakness in some US markets and other ‘global’ cities such as London.

The US-China trade war is having an effect on key markets that have been popular with wealthy Chinese investors who have used international real estate as a vehicle for moving their assets overseas.

“As China’s economy is affected by the trade war, capital outflows have become more difficult, thus weakening demand in markets including Sydney and Hong Kong,” said Patrick Wong, a real estate analyst at Bloomberg Intelligence.

In Hong Kong, prices are under pressure following a 15-year rally which has seen the region top the ‘most expensive real estate’ charts. A slowing economy in mainland China, along with rising mortgage rates and a vacant property tax, are weighing on values, which fell in the last quarter of 2018.

Meanwhile in Sydney, there was a fall in prices of more than 10% in 2018 year-over-year with analysts calling for a further 10% decline. While most have seen their home values rise around 60% since the slump of 2012, homeowners and investors are naturally concerned.

With the threat of real estate investors losing some of their tax breaks if Australia elects a new government in the spring, there are concerns that the real estate downturn may weigh on Australia’s wider economy in 2019.

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