WEALTHY homebuyers are finding global cities less welcoming — even hostile — to their cash.

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, according to a report from Knight Frank. They fell 4.4% in New York, 3.9% in London and 10% in Vancouver.

No wonder. There’s uncertainty at every corner, from trade wars to Brexit, Hong Kong pro-democracy protests and a populist backlash in some of the world’s biggest and most affluent cities that are imposing new taxes on the rich.

“The safe havens are becoming less certain,” said Dan Conn, chief executive officer of Christie’s International Real Estate. “It’s becoming much more challenging in the hubs to find a high quality place to deploy capital.”

Global cities like London, Hong Kong and New York, which seemed to defy housing-market cycles year after year following the 2008 financial crisis, are losing their status as safe places for wealthy international buyers to park their cash — or themselves. The reversal has come in part as governments erected barriers to slow runaway price growth driven — at least in part — by all the billionaire investors who came before.

The winners were cities such as Moscow, as rich Russians chose to buy at home, and Taipei, favored over Hong Kong, the world’s most expensive housing market.

Even as the flow of investment has slowed, many developers are delivering projects started when the supply of rich buyers seemed to go on forever. Now there’s a glut of luxury properties and — as anger mounts over wealth inequality — affordable units are in increasingly short supply.

“We’ve had an unprecedented run in high-end real estate and now many of these markets are struggling with excess supply or uncertainty,” said Jonathan Miller, president of appraiser Miller Samuel Inc. “‘Uncertainty’ is the most overused word in real estate right now and probably for good reason.”

TAXES ON RICH
London and New York, among other cities, passed taxes aimed at rich buyers. While the levies effectively raised prices even further, they also provided governments with extra cash for city services, as foreign buyers don’t pay income taxes. On the other hand, rich buyers also spend money on goods and services that boost local economies and sales tax revenue.

Prices got too high and economic conditions changed, said Thomas Veraguth, the Zurich-based head of global real estate strategy for UBS Wealth Management. Waves of Middle Eastern and Russian buyers pulled back, for example, after the oil crash in 2014, he said.

“It’s fatigue,” Veraguth said. “Even the richest will say, ’I’m not going to pay that price anymore.”

Markets are shifting based on local conditions, said Kate Everett-Allen, a partner at Knight Frank in London. The US election may cause buyers to pause in New York while the stability of the Swiss franc will continue to drive demand in Zurich and Geneva, she said.

Moscow had the biggest price increase in Knight Frank’s study, rising 11%. With Russia under international sanctions after its annexation of Crimea, and anti-money laundering measures tightened in London and other cities favored by that country’s elite, many opt to buy property at home. Developers also completed a number of luxury properties in the Russian capital, increasing supply.

RICH RUSSIANS
Russia has plenty of rich people. There are at least 189,500 ultra-high net worth individuals in the country controlling about $1.1 trillion, according to Capgemini estimates. It’s also incredibly unequal. There are 23 Russians on the Bloomberg Billionaires Index, a ranking of the world’s 500 wealthiest people, worth about a combined $271 billion.

In total, there are more than 100 Russians with more than $1 billion.

Chinese buyers have slowed overseas purchases, in part because of government restrictions on getting money out. And buyers everywhere are dodging risk, skipping Hong Kong, the world’s most expensive market and one now with political unrest, in favor of Taipei, which saw an 8.9% price increase in the third quarter.

While Brexit and taxes on second home buyers make London riskier and more expensive, buyers bid up prices by 10% in Frankfurt, which is a banking capital with relatively affordable prices.

When things go sideways around the globe, the US has traditionally served as an island of safety and security, particularly for the world’s wealthy.

The two biggest cities in California, the state with America’s worst affordability crisis, were near the bottom of Knight Frank’s ranking. Los Angeles rose 0.2% from a year earlier and San Francisco was flat.

The US is already home to more Hong Kongers than any country outside of mainland China, and recent data suggest more are looking to leave. Applications for a key emigration document, the “good citizenship card,” are up 54% in the past year, according to official data.

But anti-immigrant political rhetoric, high-profile incidences of gun violence and impending changes to the “investor visa” program have encouraged Hong Kong’s would-be emigres to consider alternatives such as Australia, Canada, Singapore and Taiwan.

“Everybody’s pulling back — it’s a crazy time,” Edward Mermelstein, a partner at One & Only Holdings in New York, which runs family offices for foreigners. “The wealthy have always been an easy target and now that’s a popular theme globally. It’s now so much more difficult.” — Bloomberg