We have advised our clients since at least 4 years that property prices will keep plunging every single year for a variety of reasons.
With the exception of China, Philippines and very selectively in Spain, property prices, especially of top end luxury homes are plunging worldwide, catching investors, banks, and sellers by surprise and with significant losses.
They are all being forced to sell at the worst possible time since their core businesses are also not doing well at the same time.
Our reasoning has been based on the fact that sovereign wealth funds (the largest investors in the world for several decades) are selling equities and properties, ultra rich are caught in corruption and tax investigations across the world like China, India, Saudi, Brazil, Malaysia, Korea, Nigeria, South Africa etc. just to name a few among the large countries.
In addition, currencies keep dropping and dropping. For example, GBPUSD has dropped from 2.10 levels to 1.30 level today over the past 6-7 years.
CADUSD and AUDUSD are also declining since oil started dropping in 2015. This makes previous investors to lose money even though it makes it attractive for new buyers.
The number of buyers are declining due to job cuts and rapidly dropping foreign buyers.
Many nations like Pakistan, Greece, Russia, Indonesia etc. have come out with tax amnesty to bring money back to home countries. Philippines is expected to do the same next year.
Capital controls and massive decline in emerging market currencies are another BIG reason why money has stopped flowing into global real estate.
USDINR has dropped from 40 to USD to 68 as on date over a 6-7 year period. Russia dropped from 27 to 63 as on date. USDZAR dropped from 8 to 13.50.
To top it all, the outflows from China had become so outrageous that entire countries or cities like UK, Singapore, Australia, Canada etc have put taxes on foreign buyers from 12% to 20% on EACH purchase by a foreign buyer.
Now, finally, the data has started showing on what we had predicted.
First off is Bloomberg which is a must read article of the day for every investor, every private banker, every advisor to UHNW clients worldwide:
The End of the Global Housing Boom
This is Sydney, Australia
The ‘epicentre of the downturn’: Sydney housing slump to last until at least 2020, say economists
Here a Sydney author steals our headline of “Worse is yet to come”.
‘The worst is yet to come’: House prices fall by fastest rate in six years
Dubai real estate started declining in Jan 2015 and worse is yet to come and this is as per S&P.
There is no hope in sight, according to us. Prices have dropped every single month since Jan 2015.
Dubai’s real estate slump to last until 2020 – S&P
Here is “mighty” America:
Home Prices Are Falling in One of America’s Richest Suburbs
Here is Toronto:
Toronto home prices see biggest drop in almost 30 years
Here is UK:
UK property market value drops by £27bn as sales decline for 16th month running
Two of the largest projects of a new city have defaulted this year. Over 1 million homes are lying unsold across top Indian cities because demand has plunged.
Lavasa & Aamby Valley: 2 of India’s largest ever real estate projects have defaulted
Bankruptcy of developers has happened in almost all major cities around the world from Auckland to Sydney to Alberta to Toronto to UK. Just one google search will update you.
The days of ever rising property prices have come to a slow and gradual end since the current global depression led by job cuts started a domino effect in 2014 (made worse by a sustained, deep and long term oil price decline from a high USD 120 to a low of USD 26 from Jun 2014 to Oct 2017, currently around USD 72 in Aug 2018) and as a result in 2018, we can see:
– a global supply glut
– a trade war and new tariffs at the worst possible time
– real estate declines
– rising interest rates
– highest mergers, closures and shrinkage of banking worldwide over the last decade
– sovereign wealth funds running out of money
– extremely high individual and corporate debt levels
– terror attacks in major global cities
– many businesses collapsing or slowing down globally
– rapidly dropping currencies worldwide
– major multi millionaires in jail or charged with fraud including several Presidents & Prime Ministers
– stock price declines and corporate bankruptcies (except for a select few trillion dollar companies or select tech companies) and;
– still continuing hundreds of thousands of job cuts every month….
And worse is yet to come….