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When China started tightening its capital controls on both its upper-crust investors and its public and private companies back in 2016, we anticipated that the bubble in popular urban markets (markets like London, New York City, Sydney, Hong Kong and Vancouver) was officially doomed to burst in the not-too-distant future.
And as a flood of stories over the past year have confirmed, once the foreign (mostly Chinese) bid was withdrawn, property prices started to drop. It's happening in Australia (and especially in Melbourne and Sydney), it's happening in New York, it's happening in London and - as we've catalogued over the past few quarters, it's happening in Vancouver, which for a while held the ignominious title of world's most overpriced housing market.
Chasm - Bids - Asks - Vancouver - Housing
After a chasm opened up between bids and asks in the Vancouver housing market last year, the halt in home sales has finally started filtering through to prices as reluctant sellers finally cave and cut their prices. According to data from the Real Estate Board of Greater Vancouver, the city's composite home price (which incorporates prices of houses, condominiums and townhouses) fell 4.5% in January from a year earlier to C$1.02 million ($780,000), the biggest decline since May 2013 and down about 8% from the June 2018 peak.
As we noted above, the drop in prices follows a decline in sales - the biggest drop in two decades - that many have attributed to new taxes, higher interest rates and a crackdown on dark money flowing into the Vancouver area real estate market. Meanwhile, outbound investment, Bloomberg confirms, has slumped.
Stimulus - Prices - Markets - Highs - QE
Ultimately, the Fed-led global monetary stimulus sent prices in these markets roaring to dizzying new highs during the QE era. But now that the Fed is reining in its balance sheet (and until signaling a "pause", had been raising interest rates, too)...
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