I read a very interesting article this week in the New Yorker magazine. I don’t subscribe to that particular publication, but I found it by accident while I was searching for some property information. It was actually printed back in May, written by James Surowiecki, and focused on the property market in Vancouver.

Well, that’s great, you think to yourselves, but I don’t deal with any Vancouver properties, but bear with me.

The basic premise of the article was that Vancouver’s property prices and the median incomes in the city were completely out of line. By way of an example the median income was given as $70,000, but single family homes were selling for $1m.

A local urban planner gave an illustration that the local incomes were akin to US cities Reno and Nashville, but that their property prices were comparable to San Francisco.

You quite often see these types of statistics rolled out by financial commentators or think tanks to say that property markets are overvalued and that a crash or correction is imminent. In reality, these markets may have fluctuations, but true crashes are generally few and far between.

Here in London we are used to this effect and I can, on a smaller scale, report similar mismatches in house prices and income in places like Auckland and Sydney as well as Vancouver. So, what is going on?

According to Mr Surwiecki the property markets in certain cities around the world are being skewed by the effects of a truly global market and his conclusion seems eminently plausible to me. He argues that the wealth being generated in developing economies such as the BRIC countries is increasingly being invested in the property markets of select overseas cities.

Using the Vancouver example, a report by Sotheby’s International Realty Canada examined more than twelve hundred luxury-home sales in Vancouver in the first half of 2013 and found that foreign buyers accounted for nearly half of sales. I do not have any data, but anecdotally I am sure that there would be similar statistics for Auckland with Chinese and Korean buyers investing heavily in the city. The same is no doubt true for Sydney.

As the world becomes an increasingly small place the dislocation between property prices and local incomes will continue and the challenge for the monetary authorities will be to differentiate between a market shift and a property bubble.

There are also going to be social issues to consider as the local populations are priced out of city centre locations and the knock-on effects cause prices to increase in adjacent locales. The global rich are also very mobile and we have all heard of Arab sheiks, Russian oligarchs etc that have a home in London, New York, LA, Sydney and Dubai, for example. They can’t live in all of these homes and to finish with another Vancouver example from the urban planner quoted in the article a quarter of the condos in a luxury neighbourhood called Coal Harbour were vacant on census day.