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Is the Luxury Real Estate Market Struggling Due to Hong Kong Recession?

The luxury real estate market is being affected by Hong Kong’s recession. With over 45 global cities experiencing a low price growth rate, will Canada be impacted despite recent recovery? Read as Steve Saretsky dives into details of recent events affecting Canadian real estate market.

Latest on Canadian Real Estate Market Trends by Steve Saretsky

Happy Monday Morning!

As protests escalate in Hong Kong, official Government data confirmed the economy has slipped into a recession for the first time in ten years. The economy contracted 3.2% from the previous quarter, while business activity in the private sector fell to its weakest in 21 years in October, according to research firm IHS Markit.

Future forecasts are being revised lower as the economic and political situation deteriorates further. As the world watches the city burn from afar, many are wondering the potential knock-on effects of capital fleeing for safe havens, particularly, for global cities.

According to a recent report from Knight Frank, a potential exodus of Hong Kong money has so far failed to stimulate luxury property prices in an index of 45 global cities. Luxury property prices in 45 global cities rose an average of just 1.1% in the third quarter from a year earlier, the weakest annual gain since the end of 2009. The index recorded the steepest declines in Seoul, Vancouver, and New York respectively.

Despite the continued weakness in the luxury housing markets, that hasn’t slowed Canadians confidence in their own housing market. Affordability levels remain stretched but households are still pulling the trigger, as blind faith in price appreciation remains strong. According to the Canadian Real Estate Association, national sales activity jumped 12.9% year-over-year, with transactions rising from year-ago levels in 80% of all local markets in October.

Meanwhile, the national home price index grew 0.6% from last month and swelled 1.8% from last year. In other words, despite an uncertain global outlook, foreign buyer taxes, rising delinquencies back at home, and mortgage stress tests, Canadians thirst for real estate remains unshakeable. Perhaps it will matter eventually, or perhaps Canadian Real Estate has become the eighth wonder of the world.

Three Things I’m Watching:

1. Per Knight Frank, these Global cities are seeing sharp declines in luxury property prices.
luxury real estate news decline

2. Canada’s national home price index inched higher again in October, up 1.8% from last year.
canada real estate home price

3. Per Altus Group, the months of remaining inventory available for pre-sale condos bounced higher to 8 months of supply. It hasn’t been this high since 2014.
condominium apartment

 

 

 

Steve Saretsky profile picture

About Steve Saretsky

Steve Saretsky is a Vancouver Residential Realtor and author behind one of Vancouver’s most popular Real Estate Blogs Vancity Condo Guide. Steve is widely considered a thought leader in the industry with regular appearances on BNN, CBC, CKNW, CTV and a contributor to BC Business Magazine.

For more expert insights on the real estate market and trends, visit Saretsky’s website at www.stevesaretsky.com

Steve Saretsky
[email protected]
604-809-8149

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