The shock that rippled through global housing markets as central banks rapidly raised interest rates last year has given way to a cold new reality: The real estate bonanza that fueled wealth for millions of people is over.

Markets around the world are caught between sharply higher borrowing costs — likely here to stay — and a shortage of homes that’s keeping prices elevated. That’s made housing in many areas even less affordable, while property owners with resetting loans face increasing financial strain.

The US market, dominated by 30-year mortgages, is effectively frozen as homeowners with low rates are reluctant to sell and buyers are squeezed. In the longtime boom areas of New Zealand and Canada, values haven’t fallen meaningfully for house hunters, and people who paid peak prices are now struggling with higher loan payments. From the UK to South Korea, distress is mounting for landlords. And in many places, higher interest rates are only making it harder to build.

The scenarios may be playing out differently in each country, but they all add up to a potential drag on global economies as people shell out more of their income for housing, whether they rent or own. And with buyers increasingly locked out, the viability of homeownership as a path to middle-class security — a bedrock of personal finance for generations around the world — is suddenly looking a lot more difficult. The winners are longtime owners who’ve captured equity from soaring values or don’t have a mortgage, freeing them to put cash in higher-yielding investments.

“The golden age of single-family housing is behind us,” said Mark Zandi, chief economist at Moody’s Analytics. “If you bought in the wake of the financial crisis, you built up a lot of equity in most parts of the world, but the next 10 years is going to be more of a slog.”

Zandi expects that US 30-year mortgage rates, currently about 7.4%, will average somewhere around 5.5% over the next decade, compared with a low of 2.65% in early 2021. Most other developed countries will see a similar increase, he says, even if particular levels vary.

Global Mortgage Rates Soar

The cost of home loans has more than doubled in many places

Source: Bloomberg

NOTE: Current rates are the latest available, as of these months: June (China, Australia); August (Hong Kong); September (South Korea); October (UK, New Zealand); November (Canada, US)

A lot remains unknown. A deepening war in the Middle East and the ongoing economic troubles of China — contending with its own series of property crises centered on its highly indebted developers — could contribute to a broader global downturn that would reduce housing demand and push down prices substantially, causing far worse financial turmoil. And in terms of real estate, commercial property has become more worrisome for the economy.

But even as inflation cools and many countries’ rate-hiking campaigns are easing, consumers are starting to come around to the idea that borrowing costs may never be as low as they were in the 15 years since the financial crisis. It was one thing when rates suddenly shot up and people facing higher payments thought they could muddle through, or take on mortgages with the expectation of refinancing later. It’s another when the higher costs drag on for years.

‘Glacial Period’

In the US, the collision of low inventory, rising prices and the highest mortgage rates in a generation has sent sales of previously owned homes to the lowest level since 2010, according to the National Association of Realtors. Contract closings in October fell by the most in nearly a year, dropping 4.1% from a month earlier, the group reported Tuesday.

The market is now the least affordable in four decades, with about 40% of the median household income required to purchase a typical home, data from Intercontinental Exchange Inc. show.

The most severe effects may still be to come: In a report last month, Goldman Sachs Group Inc. economists said that the impact of sustained higher mortgage rates will be the most pronounced in 2024. They estimated that transactions will fall to the lowest level since the early 1990s.

“In some ways we’re in the early stages of this glacial period, and it’s unlikely to thaw anytime soon,” said Benjamin Keys, a professor at University of Pennsylvania’s Wharton School. “This weirdness can last for a long time.”

Most US Homeowners Have Locked in Low Borrowing Costs

Mortgage holders have less incentive to move and take on higher rates

Source: Intercontinental Exchange Inc.

Notes: Interest rate represents bottom of range (e.g., 2.000% = [2.000%-2.124%]). Data for active mortgages as of end of September.

That stands to have knock-on effects. Mobility for jobs could be limited, family members and friends may more often be forced to live together, and, as the elderly age in place, homes may be kept off the market that could otherwise be purchased by younger families. At the same time, homeowners are sitting on near-record equity and the vast majority are unaffected by rate hikes, which might otherwise force sales or result in foreclosures that would give buyers a chance to enter the market.

“Things might get a little more affordable, but certainly not to what people would have hoped for,” Niraj Shah, an economist with Bloomberg Economics, said of global housing markets. “It’s going to be a struggle on both ends.”

He predicts a “slow puncture” in prices for developed economies rather than a crash, saying that an economic slowdown is unlikely to result in heavy job losses that would cause severe housing distress. But homeowners pinched by higher rates may have to cut back on spending in other areas to keep up with their mortgage payments, Shah said.

“You have distressed people, but not distressed sales,” he said.

Residential Properties in Wellington
Homes in Wellington, New Zealand.Photographer: Mark Coote/Bloomberg

Watching Pennies

One of the most extreme cases is playing out in New Zealand, the South Pacific nation that was home to one of the world’s biggest pandemic booms, with property prices rising almost 30% in 2021 alone. About 25% of the current stock of mortgage lending was taken out that year, and a fifth of those were first-time buyers, according to the Reserve Bank of New Zealand.

Mortgage rates in the country are typically fixed for less than three years — meaning the central bank’s 525 basis points of rate hikes since October 2021 are sending house payments soaring. The RBNZ says around half of the outstanding stock of mortgages have been refinanced this year. It estimates the share of borrowers’ disposable income dedicated to interest costs will rise from a low of 9% in 2021 to around 20% by the middle of 2024.

House Payments Take a Bigger Bite Out of Kiwi Budgets

Average interest servicing costs as a share of mortgaged households’ disposable incomes

Sources: Stats NZ, RBNZ Income Statement survey, RBNZ estimates

That’s squeezing the budgets of people such as Aaron Rubin, who took out a NZ$1 million ($603,000) mortgage in 2021 to finance the purchase of a NZ$1.2 million four-bedroom house. After moving to New Zealand from the US eight years ago, he and his wife, Jessica, thought buying a home in the coastal city of Nelson was a decision that would provide stability for their two young children.

At first, the couple paid around NZ$4,000 a month on their mortgage. After a refinancing, it’s now up to about NZ$6,400.

“We can no longer afford to visit our family in the US and we are literally watching every penny that flows in and out of the account,” said Rubin, a 46-year-old software engineer. “It’s time consuming and stressful, and it’s changed our lifestyle.”

He considers himself lucky — his financial situation isn’t dire, and the couple can afford to continue paying their mortgage. He sees many Kiwis under far greater pressure.

The saving grace for many households has been strong wage and employment growth that has kept distress to a minimum, said Sharon Zollner, chief New Zealand economist at ANZ in Auckland.

“Once you deflate it by household income growth, debt is actually considerably lower than it was in 2007,” she said. “But of course, the average hides a million stories, and there are certainly some stressed people out there.”

Homes Under Construction As Canada's Population Grows
A residential building under construction in Montreal. Photographer: Graham Hughes/Bloomberg

Investor Pullback

The global housing boom of the last decade made real estate a fast path to wealth in countries such as New Zealand, Australia and, especially, Canada, where tens of thousands of people turned into amateur investors. By 2020, people with multiple homes had come to account for almost a third of the housing stock in two of Canada’s three most populous provinces, Ontario and British Columbia.

But higher interest rates and bond yields mean the math has suddenly flipped. Owning a condo in Canada’s biggest city, Toronto, will now yield only 3.9% after mortgage costs and other expenses, less than the 5% earned by investing in a Government of Canada treasury bill, according to a Bank of Montreal study.

“I don’t see how you can replicate the last 20 years going forward,” said Robert Kavcic, the Bank of Montreal economist who authored the report. “You’re going to have a whole generation of investors learn a pretty hard lesson.”

The Yield Advantage for Toronto Condos Is Gone

Real estate loses its appeal compared with other investments

Source: BMO Economics

*Yield is the income offered by an asset relative to its current price

Higher borrowing costs have already pushed some investment properties deep into negative cash flow, forcing their owners to sell while also damping interest in new purchases. That could spell trouble for regular people just looking for a place to live too.

Investors buying units pre-construction has become a key source of financing for developers in the last decade, and their pullback has already seen the delay or cancellation of thousands of planned units in cities like Toronto. Canada’s already under-supplied market is one reason home prices have proved surprisingly resilient to higher interest rates, and the expected slowdown in building could only exacerbate the shortage.

A similar situation is playing out in Europe, where higher rates and soaring construction costs threaten to intensify supply strains. In Germany, new building permits fell more than 27% in the first half of the year, and in France they dropped 28% through July. Sweden, suffering its worst slump since a crisis in the 1990s, has building rates running at less than a third what’s deemed necessary to keep up with demand, threatening to further test the limits of affordability.

And that’s not even getting into the compounding strain from skyrocketing consumer prices generally. In the UK, which is facing the highest cost-of-living increase in a generation, nearly two million people have resorted to using buy-now-pay-later credit to cover groceries, bills and other essentials, according to a survey this year by the Money and Pensions Service. With more than one million homeowners estimated to be refinancing their mortgages this year at much higher levels, that pressure will only get worse.

UK House Prices Fall the Most in 14 Years
Residential properties in Guildford, UK.Photographer: Jason Alden/Bloomberg

A report released in September by KPMG showed almost a quarter of UK mortgage holders are considering selling and moving to a cheaper property due to the surge in financing costs, and mortgages with late payments now account for over 1% of the value of outstanding home loans. For landlords, who often have floating-rate mortgages, it can be worse, and that translates directly into pressure on renters.

London landlord Karen Gregory had little choice but to sell her building after her mortgage payment jumped more than threefold, leaving her with the prospect of evicting a young couple with a baby on the way. They found a new home before her deal, but the situation left her fed up.

“Landlords have had enough of the increase in interest rates,” Gregory said.

Asia Shakeout

In Asia, South Korea is contending with its own landlord fallout. The country has the developed world’s highest ratio of household debt-to-gross domestic product, at 157%, if the roughly $800 billion is counted from “jeonse” — a rental system unique to the country.

Under the system, landlords collect a deposit called jeonse that’s equal to roughly half of a property’s value at the start of the lease period, which typically runs for two to four years. When interest rates go up, jeonse becomes less attractive than paying monthly rent and the size of the deposits landlords can get from renters falls. Because owners often use new deposits to pay back old ones when leases expire, it becomes harder for them to meet their obligations.

The risk of defaults from jeonse landlords is expected to persist through 2024, because the contracts coming due were signed when prices — and hence deposits — were at record highs.

Seoul Properties As Moon Government Facing Pressure To Ease Housing Affordability
Newly constructed residential apartment buildings in Gimpo, South Korea.Photographer: SeongJoon Cho/Bloomberg

Hong Kong, meanwhile, has been hit by China’s slowdown, a population exodus and rising rates that have halted once-unstoppable price gains. Since its currency is pegged to the greenback, the city’s monetary policy generally moves in tandem with the US. That’s caused mortgage rates to more than double since the beginning of 2022. Existing-home prices in the notoriously expensive area have fallen to a six-year low, builders are offering deep discounts and the government is slashing extra stamp duties for some buyers to revive the hub.

Unless interest rates start falling, the Hong Kong housing market will continue to suffer. Prices in the city had surged so much in the past decade that homes are still unaffordable to many, meaning the recent drop in values doesn’t offset the higher borrowing costs — the same scenario that’s playing out in much of the world.

Housing markets “have had a real party the last two decades, and this is simply because you’ve had record low interest rates and lack of supply fueling house prices,” said Shah of Bloomberg Economics. “The decade ahead has to be the decade of great moderation.”

A recession in the euro area is looking increasingly likely as the economic downturn persists in the final quarter of the year, private-sector activity surveys showed.

Meantime, the outlook for global trade got a boost this week as South Korea’s exports are likely to maintain momentum. Elsewhere in Asia, Chinese banks maintained their benchmark rates as they aim to boost liquidity and support lending.

Here are some of the charts that appeared on Bloomberg this week on the latest developments in the global economy:

Europe

S&P Global’s purchasing managers’ index was in contraction again in November, hitting 47.1. While that’s a bigger uptick than anticipated by economists, it marks the sixth consecutive month below the 50 level that marks expansion. Readings for both manufacturing and services showed a similar trend.

Germany’s Special Funds Exceed Regular Annual Budget*

Sources: German Finance Ministry, Federal Audit Court* Off-budget funds are multiyear

Germany will suspend a constitutional limit on net new borrowing for a fourth consecutive year after Chancellor Olaf Scholz’s government was forced into a radical budget overhaul by a ruling last week from the nation’s top court. The emergency move to lift the so-called “debt brake” will be part of a revised 2023 budget that Finance Minister Christian Lindner plans to present next week.

Asia

Chinese Authorities Urge Stable Credit Expansion

Banks told to coordinate credit expansion from now until early 2024

Source: People’s Bank of China

China may be done with rate cuts for now as policymakers turn to other means to support the economy and stabilize credit growth headed into the new year.

Semiconductor Recovery Continues

South Korea’s chip exports emerge from a deep slump

Source: Trade Ministry

South Korea’s early trade data show exports are likely to maintain their growth momentum this month, continuing their rebound from a year-long slump and helping brighten the outlook for global commerce. Korea is a key global exporter, so its exports serve as a useful indicator of the health of the global economy.

Emerging Markets

Thai Economic Growth Lags Behind Regional Peers

Source: BloombergNote: 2023 and 2024 are from Bloomberg’s survey of economists

Thailand’s economic growth unexpectedly slowed in the third quarter as manufacturing slumped on weak exports, supporting the case for the new government to proceed with its planned $14 billion cash handout program.

Chile’s economy expanded more than forecast in the third quarter led by the mining sector, as the central bank started easing monetary policy. Gross domestic product rose 0.6% in the July-September period from a year earlier.

Marathon Month for African Central Banks’ Rate Decisions

At least 17 will pronounce on rates with most anticipated to hold

Source: Bloomberg reporting

In what will be a marathon month for interest-rate decisions in Africa, its biggest economies are set to keep interest rates higher for longer. Angola and Zambia hiked this week to temper stubborn inflation and stabilize the local currency, and Nigeria is expected to hike as well. South Africa maintained its current rate, and others including Morocco, Kenya and Ghana are seen doing the same.

US

Average 401(k) Retirement Account Balance

The average 401(k) balance is up by just $1,200 in the past 5 years

Source: Fidelity

Americans are increasingly tapping their retirement savings to cover housing and medical bills amid higher cost-of-living pressures, according to data from Fidelity Investments. Some 2.3% of workers took a hardship withdrawal last quarter, up from 1.8% a year earlier.

US mortgage rates dropped sharply, capping the biggest four-week slide in nearly a year and spurring a fresh round of applications to purchase homes.

World

Global Central Banks’ Use of PBOC Swap Lines Keeps Climbing

Foreign countries increasingly tapped currency swap to get yuan

Source: People’s Bank of China

China and Saudi Arabia have signed a local-currency swap agreement worth around $7 billion, deepening their ties as countries across the Middle East look to shift more of their non-oil trade away from the dollar.

Global Mortgage Rates Soar

The cost of home loans has more than doubled in many places

Source: BloombergNOTE: Current rates are the latest available, as of these months: June (China, Australia); August (Hong Kong); September (South Korea); October (UK, New Zealand); November (Canada, US)

The shock that rippled through global housing markets as central banks rapidly raised interest rates last year has given way to a cold new reality: The real estate bonanza that fueled wealth for millions of people is over.

Central Banks Are Diverging on Rates

Change in borrowing costs since the start of 2023

Source: BloombergNote: Mapped data show change in interest rates for distinct central banks.

Hungary’s central bank cut its main interest in line with guidance, resisting government pressure for a bolder move in lowering the European Union’s highest borrowing costs. Sri Lanka and Paraguay also cut. Turkey’s central bank hiked interest rates by double the amount markets expected, while Sweden and Indonesia left rates unchanged.

The €4.5 billion ($4.9 billio

) loan backing Blackstone Inc. and Permira Holdings’ buyout of European online classified company Adevinta ASA this week didn’t just smash records. It also highlighted a new trend that sees institutional investors offer portions of the debt direct to the borrowers.

They’re doing so because pension funds and sovereign wealth funds — among the largest pools of capital on the planet — are increasingly eager to cut out the middle-man when investing in the $1.6 trillion private credit market.

As a result, managers of direct lending funds risk becoming victims of their own success, as their investors decide to seek for themselves the lucrative double-digit returns that can be on offer. Such moves will also make it harder for investment banks to win back the profitable business of buyout financing once dealmaking returns in volume.

The Canada Pension Plan Investment Board (CPPIB) provided the largest chunk of the Adevinta private loan, while Singaporean sovereign wealth fund GIC contributed the third-biggest piece, according to people with knowledge of the matter who weren’t authorized to speak publicly.

GIC, CPPIB, Blackstone and Permira declined to comment. Normally, both CPPIB and GIC act as limited partners — LPs in industry parlance — and provide funds to private capital managers, or general partners, to deploy.

“As investors become more sophisticated and understand the risk they’re taking, they’re able to take it on a proprietary basis rather than doing it through a fund,” said Jeffrey Griffiths, co-head of global private credit at Campbell-Lutyens & Co Inc.

Private equity fund managers themselves are bringing LPs into their deals, said Karen Simeone, a managing director at private capital investor HarbourVest, meaning that they are playing an increasingly large role in private credit.

“Sponsors want to know the mindset of the owner of that paper and it works for the LP return profile,” she said. This benefits the sponsor in terms of supplying patient capital for their deals and also offers LPs potentially improved returns.

It’s not the first time that either CPPIB or GIC joined a fund manager to invest in a private credit deal and they’ve even invested alongside Blackstone before, the people with knowledge of the matter said. But Adevinta is a unique step and a possible herald of more to come.

Some of the most expensive major cities in the US — like San Francisco and Washington — also offer the best living standards for mid- and lower-income households, according to a new study of metro areas by the Ludwig Institute for Shared Economic Prosperity.

Higher prices in those places are more than offset by the higher wages on offer, according to the institute’s analysis, which ranks the 50 biggest US metro areas based on the economic well-being of middle- and working-class residents. San Jose in California comes out on top.

The gauge is based on metrics that include the costs of basic goods and services — and how much they’ve gone up over the past two decades — as well as wages and broad measures of employment. One key finding is that the best-performing cities typically have a more equal mix of jobs across the pay spectrum.

Best US Cities for Middle Class Have Even Split of Jobs

Among 5 cities that rank highest on Ludwig Institute gauge, share of employment in jobs classified as:

Source: Ludwig Institute for Shared Economic Prosperity

 

“Across the nation we are seeing both ends of the spectrum — communities where middle- and working-class families are faring well and others where financial survival remains a struggle,” said Gene Ludwig, head of the institute and a former US comptroller of the currency.

The report tracks price changes for essential items like housing, food, and childcare, and compares that with the median weekly incomes of all members of the workforce — including those in part-time employment, who are excluded from many wage measures, or seeking work.

‘Falling Behind’

Overall, 60% of Americans struggle to meet basic needs, according to the report. That likely reflects sharp increases in the price of necessities, especially housing, during the inflationary wave of the pandemic period.

An analysis by the US Senate Joint Economic Committee found it costs about $11,400 a year more on average for a US family in October 2023 to maintain the same standard of living that they had in January 2021.

But in places like San Jose and San Francisco, two of the most expensive metro areas, higher wages have buffered against those rising costs. One measure the Ludwig researchers looked at is how much cash a median earner has left over after purchasing necessities each month.

“A lot of cities are actually negative with that,” said Philip Cornell, a member of the research team. “If you’re a median earner in Los Angeles and you’re just trying to meet your basic needs, you’re falling behind. Whereas in San Jose, the median earner is doing better.”

The San Jose area ranked first among 50 metros in leftover income, and fourth in the change in spending power for the city’s residents compared with 2005. On that measure, Seattle was one of the worst performers, showing that living standards there aren’t keeping up with prices.

In Bottom-Ranked Cities, Jobs Skew to Lower Pay

The 10 worst-scoring metros in Ludwig’s rankings typically have more uneven mix of jobs at different wage levels

Source: Ludwig Institute for Shared Economic Prosperity

 

New York City is among the large metro areas where middle- and working-class families are faring worst, according to the Ludwig gauge. Other high-cost cities like Los Angeles also came out near the bottom of the rankings.

One thing that many of the worst-ranked cities have in common is a unusually high share of low-paying jobs.

In Las Vegas, almost two-thirds of workers are in low-wage occupations and in Miami the figure is 56%, according to the report. By comparison, the typical national figure is around 35%, and some of the best-performing cities on Ludwig’s ranking — like Austin and Baltimore — have a lower reading than that.

Saudi Arabia’s non-oil economy saw its fastest job growth in nine years in October, signaling another improvement in business conditions as the world’s biggest crude exporter seeks to diversify.

The Riyad Bank purchasing managers index for Saudi Arabia rose to 58.4 in last month from 57.2 in September. The gauge was well above the 50-mark separating growth from contraction and “indicative of a substantial upturn in the health of the Saudi Arabian non-oil private sector,” the report said.

The sharpest rise in employment growth since October 2014 came as companies sought to add to their staffing capacity after strong demand for new orders.

“The employment expansion is a promising sign for the Saudi economy, as it suggests a growing demand for labor and a potential improvement in the job market,” said Naif Al-Ghaith, chief economist at Riyad Bank.

The strong PMI numbers for October follow official figures for the third quarter of the year indicating that private sector growth was losing steam. Non-oil economic output growth slowed to 3.6%, according to data released last week. On a quarterly basis, it rose 0.1%, the softest pace of acceleration since the end of 2020.

The $1.1 trillion economy suffered its biggest contraction since 2020 during the third quarter, after the kingdom cut oil production in July in a bid to push up prices.

Backlog order volumes decreased at the sharpest rate since August 2022, according to the PMI data. That was driven by increased hiring, as well as “supportive government policies and subsequent improvements in the ease of doing business,” according to the report.

Mubadala Investment Co. said it will be an anchor investor in a new special situations fund set up by Starz Real Estate, as deep-pocketed Middle Eastern investors play an increasingly pivotal role in private credit.

The Starz Orion Capital fund will target real estate lending and investment opportunities across Europe for refurbishment and redevelopment, according to a statement on Wednesday. It will also support the acquisition of distressed debt and non-performing loans and acquisition of real estate securities.

Starz Real Estate didn’t say how much Mubadala is investing, but said it expects to raise a further 300 million euros ($327 million). In 2021, Mubadala — which manages $276 billion of assets — provided the anchor investment for the Starz Zenith Capital Ltd. fund.

Mubadala’s commitment reflects continued increase in “exposure to alternative investments, including in private credit, to achieve stable financial returns,” Khadija Benzit, head of European real estate investments at Mubadala. “With the current market environment, private credit is playing a bigger role in supporting real estate players.”

Sovereign wealth funds are increasingly pushing into the $1.6 trillion private credit market, which has been gaining traction over the past few years as investment banks and traditional debt investors pulled back from leveraged debt amid fears around rate rises and an economic slowdown. Investors seeking higher yields have poured money into the asset class, turning it into a thriving market.

Meanwhile, housing markets across Europe are struggling as higher rates and soaring construction costs have threatened to intensify supply strains.

“As market dynamics continue to evolve, the fund is well-positioned to provide flexible, tailored and timely solutions to meet the ever-changing needs of real estate investors and developers,” Starz Real Estate Chief Executive Officer David Arzi said in the statement.

The past 12 months have been the hottest on record, as 99% of the world’s population experienced above-average warmth, according to new analysis released Thursday.

Average temperatures between the start of November 2022 and through October this year were 1.32C (2.4F) above pre-industrial levels, eclipsing a previous 12-month record set during October 2015 to September 2016, analysis by the non-profit Climate Central found.

“Records will continue to fall next year, especially as the growing El Niño begins to take hold, exposing billions to unusual heat,” said Andrew Pershing, vice president for science at Climate Central. “While climate impacts are most acute in developing countries near the equator, seeing climate-fueled streaks of extreme heat in the US, India, Japan and Europe underscores that no one is safe from climate change.”

The analysis comes at the end of a period of unusually hot weather. June, July, August, September and October were each the hottest on record. This calendar year is “virtually certain” to be the warmest ever, the EU’s climate change service said earlier this week. Drought, storms, wildfires, floods and heat waves have bruised economies and led to spikes in hospitalizations around the world. Extreme weather was exacerbated by carbon-dioxide emissions from the burning of fossil fuels. The natural climate phenomenon El Niño is beginning to boost temperatures, but the strongest effects will be felt next year, the researchers said.

“This is the hottest temperature that our planet has experienced in something like 125,000 years, the hottest temperatures that humans have experienced for the time when we’ve decided to write down things, build cities and live together in large groups,” added Pershing.

California Joshua Trees Severely Burned in Massive Wildfire
Burnt Joshua Trees in Wrightwood, California, on Sept. 14. California’s iconic Joshua trees have been severely damaged by wildfires that have burned thousands of acres in the Mojave Desert.Photographer: Kyle Grillot/Bloomberg

Climate Central analyzed the past 12 months using its own metric, the Climate Shift Index, which uses models and data from the recent past to estimate how often a particular temperature would have occurred with and without the influence of human-caused climate change. Over the full year, 90% of people experienced at least 10 days of temperatures made at least three times more likely by climate change, the analysis found. Almost everyone — 99% of the population — experienced higher temperatures over the last 12 months, compared with averages over the previous three decades.

The past year has been an “extraordinary” one for the global climate, said Joyce Kimutai, principal meteorologist at the Kenya Meteorological Department, in a briefing for journalists. “As we continue to burn these fossil fuels, temperatures will definitely continue rising. We are seeing these impacts are continuing to accelerate and rise. It’s not just in one part of the globe. It’s really affecting every human being in this planet and it’s mostly affecting the vulnerable people.”

The climate change-induced heat was more severe between May and October this year, the research found. The longest streak of these extreme temperatures was seen in Houston, Texas, where a 22-day heat wave began at the end of July. New Orleans as well as two Indonesian cities, Jakarta and Tangerang, all experienced 17-day heat streaks.

Dozens Killed In Maui Wildfire Leaving The Town Of Lahaina Devastated
A neighborhood destroyed by wildfire in Lahaina, Hawaii, on Aug. 16.Photographer: Justin Sullivan/Getty Images

Within the US, Hawaii experienced some of the worst physical impacts from heat stoked by the climate crisis with deadly wildfires in August. Across southwestern states, doctors cared for burn injuries from super-hot sidewalks and used ice-filled body bags to cool down patients with body temperatures of 110F. Heat waves in Europe also left healthcare systems struggling to cope. In Italy, Covid-era admission levels were seen in hospital emergency departments, the report said.

Heat has been relentless in Jamaica, Guatemala and Rwanda. On the average day over the past 12 months, citizens of those countries have experienced extreme temperatures made over four times more likely by climate change.

TOPSHOT-MALAWI-WEATHER-CYCLONE-FREDDY
Mourners stand behind coffins during a mass funeral for mudslide victims in Blantyre, Malawi, on March 15.Photographer: Amos Gumulira/AFP/Getty Images

In February and March, exceptionally strong and long-lasting Cyclone Freddy unleashed floods, landslides and strong winds that killed over 200 people in Malawi, Mozambique and Madagascar. Climate change has made heavy rain heavier and cyclones more intense, due to increased energy from warming oceans. Overall, extreme weather has killed at least 15,700 people in Africa this year so far, and a recent drought in the Horn of Africa has left over 23 million people suffering food insecurity.

Ships Are Backed Up at the Panama Canal Because of Historic Drought
Cargo ships wait in the anchor zone to cross the Panama Canal during the drought near Panama City, Panama, on Sept. 1.Photographer: Walter Hurtado/Bloomberg

South America was significantly warmer than normal for the first half of 2023. Bolivia’s Lake Titicaca and Brazil’s Amazon river receded to record low levels. A prolonged two-year drought in Central America has led to restrictions limiting ships’ maximum depth and the number of vessels that can pass through the Panama Canal, which supports around 5% of global maritime trade.

Huawei Technologies Co. and China Mobile Ltd. have built a 3,000 kilometer (1,860-mile) internet network linking Beijing to the south, which the country is touting as its latest technological breakthrough.

The two firms teamed up with Tsinghua University and research provider Cernet.com Corp. to build what they claim is the world’s first internet network to achieve a “stable and reliable” bandwidth of 1.2 terabits per second, several times faster than typical speeds around the world. Trials began July 31 and it’s since passed various tests verifying that milestone, the university said in a statement.

Tsinghua, Chinese President Xi Jinping’s alma mater, is plugging the project as an industry-first built entirely on homegrown technology, and credits Huawei prominently in its statement. The Chinese firm in August made waves when it released a 5G smartphone with a sophisticated made-in-China processor, inspiring celebration in Chinese state and social media. That event also spurred debate in Washington about whether the Biden administration has gone far enough in attempts to contain Chinese technological achievement.

The network “is operated based on China’s domestically-owned key technologies,” the official Xinhua News Agency said in a report carried on Tsinghua’s website.

Bloomberg News hasn’t verified the authenticity of those claims. In February, Nokia — Huawei’s global rival — announced it’s achieved 1.2 terabits a second over what it called “metro distances” of about 118 km on an optical network in Europe.

Global luxury retailers counting on wealthy Chinese shoppers to raise their sales might be dismayed by recent reports pointing to a slowdown in their appetite for pricey bags and clothes.

There’s been a “decline in optimism” since April among Chinese high-net-worth individuals in the past six months, according to a report released this week by Agility Research & Strategy — a consulting firm focusing on the affluent — which tracks consumer sentiment among wealthy Chinese each month.

Agility surveyed 2,000 affluent Chinese, including more than 600 high new worth individuals who are US dollar millionaires. Poor investment performance — both in real estate and the financial market — took a significant toll on their confidence during the latest quarter, the report said.

An initial rebound in the first quarter of 2023 after China’s reopening from Covid gave way to a “steady downward trend” that’s continued through October, the report said. The wealthier group of 600 turned even less bullish about investments than the others — the first time Agility has seen such a downturn since it began tracking the data in 2016, Agility said.

“In the China market, as in many others, it’s been a truism that, the wealthier the person, the less impacted they are by shocks and downturns in the economy,” Agility said. “As 2023 has gone on, this appears to have changed.”

Increasingly Cautious

China’s shoppers have grown more cautious in recent months amid economic turbulence fueled by property market crisis and elevated youth unemployment. Deflationary pressures are adding to concerns about the growth trajectory for the world’s second-biggest economy. That could worry a global luxury-goods industry that’s still counting on a rebound in China to fuel future growth and make up for weakness in other key markets.

Chinese consumers are expected to contribute 22-24% of worldwide luxury spending this year, according to estimates from Bain & Co., down from 33% in 2019, before the pandemic. That figure is expected to rise to at least 35% in 2030 — topping US shoppers, the world’s second-biggest luxury spenders.

Monthly luxury spending monitoring conducted by HSBC, which mainly measures tax-free shopping, also showed only a “muted recovery” in Chinese consumption. October spending on luxury resumed just around 81% of the 2019 level, it said, without significant improvement from the previous month. Specifically, Chinese spending on luxury in Europe in October only reached 52% of the pre-pandemic level.

Headwinds that will face the €1.5 trillion ($1.6 trillion) global luxury market in the fourth quarter include macroeconomic tensions in China and sparse signs of recovery in the US, according to Bain this week. Challenges hindering Chinese consumer confidence include “normalized” GDP growth rates, swinging real estate markets and increasing youth unemployment, with the China market back up to just 70%-90% of record highs seen in 2021, Bain said.

Luxury bellweather LVMH’s sales in Asia, excluding Japan, grew 11% in the third quarter — well short of estimates, and a sign that China may be weaker than expected. Richemont’s Asia sales were also harmed in recent months by China’s slower-than-expected economic growth, signaling signs of a possible pullback in consumer spending.

The overall luxury goods and apparels segment in Europe reported slower sales growth in the third quarter compared with the first half, with disappointing demand in China and the US causing the slowdown, according to a note from Bloomberg Intelligence’s Laurent Douillet and Tim Craighead this week.

Prices for used Rolex and Patek Philippe watches fell to fresh two-year lows on the secondary market last month as demand for pricey timepieces continued to decline amid rising supply.

The Bloomberg Subdial Watch Index dropped 1.8% in October, sinking to its lowest level since 2021. The index, which tracks prices for the 50 most traded watches by value on the secondary market, is now down 42% since a high in April 2022.

The declines follow a massive surge in prices to record levels for the most in-demand Rolex, Patek and Audemars Piguet models during the pandemic. Now that interest rates have jumped amid strong inflation coupled with rising geopolitical tensions and shaky economic growth, watch collectors are curbing timepiece purchases.Christy Davis, the co-founder of Subdial, a UK-based watch trading platform, said there are signs of further weakening as supply rises and it takes longer for used watch dealers to sell their stock.

“We are seeing growing downward pressure in the market, which could lead to a further downward drift in prices as dealers cut valuations to chase sales,” Davis said in Subdial’s October Market Update.

Watch Price Declines Since Peak

Rolex prices outperform Patek

Sources: Bloomberg, Subdial

The number of used watches available on the secondary market has risen by 5% since August, according to Subdial. Price uncertainty, which measures the spread in prices offered for a watch from different sellers, has increased 12% over the same period.

“With more watches available at a wider spread of prices, what we’re seeing is people dropping prices to chase sales going into the holiday season,” Davis said.

As buyers have become more cautious and discerning, the average number of days that a pre-owned watch takes to sell has increased by 8% since August, according to data compiled by Subdial.

A Rolex brand index fell 1.5% last month and is now down 27% since the April 2022 market peak, data compiled by Bloomberg and Subdial shows. An index of Patek Philippe model prices dropped 2.3% in October and is now down 47% since April, 2022.

While secondary market prices for Rolex and Patek watches have corrected sharply since their peak, the most in-demand models for both brands continue to trade well above the prices they are sold for at retail.