Where the hurt is
Why house prices in global cities are falling
CENTRE POINT, a tower that looms over central London, was empty for so long in the 1970s that it lent its name to a homelessness charity. Recently it was converted from offices to flats. Half are yet to find buyers. So the developer has taken them off the market pending a clearing of the political fog over Britain. Its boss complained to?Estates Gazette, a trade paper, of bids that were “detached from reality”. One-bedroom flats were on sale for ￡1.8m ($2.4m).
上世纪70年代，矗立在伦敦市中心的中心点大厦（Centre Point）因为长期空置，连名字都借给了一间游民慈善机构。近些年，它从写字楼改成了公寓楼，其中一半公寓还未卖出。于是开发商将它们从市场中撤出，等待英国政治的迷雾消散。它的老板向一家行业报纸《地产公报》（Estates Gazette）抱怨买家出价“与现实脱节”。一居室公寓售价为180万英镑（240万美元）。
Even flats with less hefty price tags have been hard to shift lately. Property prices in London are falling. Sellers are waiting for better prices. It is tempting to put all the blame on Brexit, but that would ignore the broader picture. House prices in big global cities increasingly move together. What happens in London has a growing influence on what happens in New York, Toronto and Sydney—and vice versa. And trouble is brewing in some of these other markets, too.
Property used to be thought of as an inflation hedge. But in recent years it has become a substitute for low-yielding Treasury bonds—a safe asset in which the globally mobile can store their wealth. After years of rapid price rises, houses in the most favoured markets are overvalued. Rising bond yields, tighter mortgage credit and shifting politics are now combining to push prices down.
The value of homes in the posher parts of global cities move in sync because they have become a distinct asset class. Private-equity firms and investment trusts, not just individuals, own them. Prices in such cities are explained more by global factors, such as the yields on the safest government bonds, than by local conditions. This global influence is particularly marked in financial centres that are open to capital flows, such as London, New York, Toronto and Sydney. It has extended into smaller European cities, such as Amsterdam.
Demand from emerging markets such as China and Russia has been growing. Buyers are willing to pay steeply to secure a safe place for their savings—or a bolthole for themselves. Cristian Badarinza of the National University of Singapore and Tarun Ramadorai of Imperial College London have shown that political trouble in Russia, parts of Africa and the Middle East predicts a rise in the price of prime London property. The same sort of influence is also found in less ritzy neighbourhoods, says Mr Ramadorai. For instance, property prices in Hounslow and Southall, which have lots of settlers from South Asia, picked up in the early 2000s, a period of political tensions in India.
来自中国和俄罗斯等新兴市场的需求一直在增长。买家愿意支付高价来为自己的储蓄找一个避风港——或为自己留一处避难所。新加坡国立大学的克里斯蒂安·巴达林扎（Cristian Badarinza）和伦敦帝国理工学院的塔伦·拉马多利（Tarun Ramadorai）已经指出，俄罗斯、非洲部分地区和中东地区的政治问题预示着伦敦高档房地产的价格将上涨。拉马多利表示，在不那么豪华的社区也能看到这类影响。例如，拥有大量南亚移民的亨斯洛（Hounslow）和绍索尔（Southall）的房价在本世纪初出现回升，当时印度正处于政治紧张时期。
Foreign demand has spillovers. If an oligarch buys a house, it drives up the prices of smaller properties nearby. A paper by Dragana Cvijanovic of the University of North Carolina and Christophe Spaenjers of?HEC?Paris finds similar effects in Paris’s property market. Foreign buyers, mostly from China, have been a force behind booms in the big cities of Australia and Canada.
外来需求有溢出效应。如果一个大老板来买了套房子，就会推高附近较小房产的价格。北卡罗莱纳大学的德拉加娜·茨维亚诺维奇（Dragana Cvijanovic）和巴黎高等商学院的克利斯朵夫·斯巴尼亚斯（Christophe Spaenjers）在一篇论文中指出，巴黎的房地产市场也存在类似的情况。大多来自中国的外国买家推动了澳大利亚和加拿大的大城市的楼市繁荣。
But the tide has changed. Global cities look awfully dear. The rental yield on investment homes worldwide fell below 5% for the first time ever in 2016, according to?MSCI IPD, a financial-information firm. House prices relative to incomes are well above their long-run average in Amsterdam, Auckland, London, Paris, Sydney and Toronto (see chart).
And prices are falling in some of the dearer cities, in response to a variety of forces. The yield on Treasury bonds, the world’s benchmark safe asset, is rising. A tightening of credit standards on mortgages in Australia and Canada has squeezed housing in cities there. Uncertainty about Brexit has made London a place of political risk rather than a refuge from it. Meanwhile, capital is moving less freely. Governments are charier of Russian money. China is shaking down its super-rich for taxes and is zealous in its policing of capital outflows.
A corollary of stronger links between global cities is a kind of “waterbed” effect. For instance, when taxes were levied on foreign homebuyers in Vancouver in 2016, the market cooled, but Toronto took off. There are buyers who will compare prices in, say, Mayfair in London and Park Avenue, New York. They look for value. But it is vanishingly scarce. The market is turning. Those who bought at the peak, or are hoping to sell, will slowly adjust to a new reality.
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