If you've been following news of the slowdown in the Toronto and Vancouver housing markets, you've likely heard the narrative built around it: Tough new government regulations, combined with interest rate hikes at the Bank of Canada, are slowing down Canada's most strained, overpriced markets.
But the same slowdown seems to be happening in many major cities around the world, and the causes are often very similar: Rising interest rates, new regulations, a volatile stock market and — in many cases — the disappearance of demand from Chinese buyers.
Watch: Should Canadians be worried about a recession in 2019? Story continues below.
What's interesting is that the slowdown seems primarily to be affecting "world class" cities — those that attract large numbers of people and money from abroad, especially the wealthy.
But many cities with more regionally focused economies (think Denver instead of L.A. or Winnipeg instead of Toronto) continue to see strong markets. So in Europe, London flails while Edinburgh and Madrid boom. Toronto and Vancouver swoon, while sales hit new highs in Ottawa and Montreal.
That's the nature of housing markets in a globalized economy. In a report last year, the IMF noted that house price trends from Toronto to Sydney to London are becoming increasingly synchronized. The "global factor" now accounts for a third of the house-price change in a city like Vancouver, it estimated.
Earlier on HuffPost Canada:
That's a little bit scary, because housing is an important part of the economy in any part of the world, and a synchronized global housing slowdown could kick the feet right out from under the economy.
But hey, at least Toronto and Vancouver aren't alone. Here are some of the other cities also moving into a seeming housing market correction these days.
Sydney and Melbourne
Australia's housing market, and really its whole economy, are probably the closest parallel to Canada's. A rapidly-growing resource sector made its economy a powerhouse over the past few decades, and like in Canada, house prices soared.
And like in Canada, consumers got themselves heavily into debt — perhaps even more dangerously so in Oz, where you can actually get an interest-only mortgage. Add to that a government crackdown following a scandal over inappropriate mortgage lending at the banks, and you have a recipe for a slowdown.
The demand just isn't there these days for real estate in one of the world's priciest cities.
For the first time in three years, the median price of an apartment in Manhattan fell below US$1 million in the final months of 2018. Unsold homes are piling up, with a 17-per-cent increase in available properties over the past year.
Realtors blame the slowdown on rising mortgage rates, less generous tax deductions following federal tax reforms and a stock market that has eaten into investors' savings.
But it may also have something to do with the fact that New York City is actually seeing a net population decrease — which itself may have to do with the city's outrageous real estate prices.
For years, London was the top destination for the world's wealthy in search of a second home. Brexit threw a bit of a wrench into the works, but maybe not as much as some would have expected. Until recently, the country continued to experience strong house price growth.
Not so much anymore. Prices in Greater London have fallen very mildly, but for two straight years, something that hasn't happened since the 1990s. Still, it may not just be Brexit pushing the market down; the city has grown supremely unaffordable and a growing number of residents are looking to leave. Like New York, more people are leaving London than moving in.
The world's least affordable housing market seemed capable of incredible feats of gravity-defying growth, but the slowdown in China's economy over the past year has taken the wind out of Hong Kong.
The city has just seen its largest house-price decline since the 2008 financial crisis, falling 3.5 per cent in November. Prices are down about 7 per cent from a peak last July, according to the South China Morning Post.
The trade war between China and the U.S. is taking a toll on the economy, and expectations of rising interest rates and an oversupply of new homes is also making buyers cautious, the Post reported.
Beijing and Shanghai
After years of rapid house price growth that eroded affordability, China's housing authorities are cracking down on the market with a steady series of regulations
These efforts are now beginning to bear fruit. House price growth in China has fizzled to a fraction of what it was, and in the largest cities, prices are now falling. A home resale index for Beijing has been falling since September, while Shanghai's has been falling for a year, Bloomberg reports.