- charts from ‘Global House Price Monitor’ by the International Monetary Fund’s Prakash Loungani, 12 Dec 2011
[Similar data to that in the recent article in 'The Economist' 26 Nov 2011]
Further:
“An econometric model of the determinants of house prices… explains house price growth based on several short-run momentum factors, such as growth in incomes, asset prices and population, and long-run factors, such as the house price to income ratio. The difference between house prices and those predicted on the basis on these ‘fundamental’ factors gives an indication of whether there is room to fall. The results from this exercise show that in many countries the declines in house prices over the past five years (the ‘actual’) are close to, or even exceed, what was predicted by the model. But for many countries, house prices are still resisting the predictions of the model.”
Speaking of country comparisons…
[WSJ] – Beyond Borders: Europeans Stash Money Elsewhere
“Andrea Caraceni, head of CFO Family Office, a Milan-based wealth manager with €800 million under management, is counseling clients to move money outside Europe altogether, including jurisdictions such as the U.S., Australia or Canada. And Roberto Lenzi, a Milan-based lawyer specializing in wealth planning for investors with at least €5 million in assets, has had requests in recent months from clients looking for help in moving their residences as well as their assets abroad…
…London real estate also is luring spooked euro-zone investors. Purchases of central London residential homes by Greek nationals have tripled in the last year at leading agent Knight Frank, according to Liam Bailey, the firm’s head of residential research, while Spaniards’ acquisitions have doubled….
…Some are considering more radical options. Paolo Gaeta, a Naples-based lawyer specializing in trusts, has been busy helping clients deposit their wealth in new trusts established in Singapore, the Bahamas and the island of Jersey in the English Channel. “We are being bombarded by clients,” he says. “…
http://tinyurl.com/8xk4ykj
[NoteToEd: ... the bifurcation case exemplified]
Hard to believe for many bears, but RE is still looked upon favourably as a store of wealth. Many people are parking money in overvalued London, even though the Ireland debacle is just next door.
What if Vancouver is in the same boat? What if the market remains resilient for another 5,6,7 years?
“What if the market remains resilient for another 5,6,7 years?”
The best analogy I can think of is winding up a spring.
As much as I see the long-term dangers of asset price bubbles, if some guy comes and offers you gobs of cash for a relatively small plot of land, DUDE, TAKE THE MONEY!!!!
“if some guy comes and offers you gobs of cash for a relatively small plot of land, DUDE, TAKE THE MONEY!!!!”
and do what with it?
unbelievable as it seems some people like living in Vancouver and being close to family and work. The benefits of living in the city far outweigh the potential winfall from selling. Why else hasn’t there been a stampede out of town with a “small plot of land” selling for close to a million bucks?
formula1 -> “Why else hasn’t there been a stampede out of town with a “small plot of land” selling for close to a million bucks?”
—
Excellent question!
The answer appears to be that owners expect that plot of land to be worth steadily more in coming years. If they saw a significant risk of downside, the stampede you ask about would begin.
no stampede? WTF? u no read?:
http://www.vanmag.com/News_and_Features/Gone
And to conclude the best of today’s ‘stream’, two final, thematically related abstracts… (one is decidedly funnier, which one will depend on your POV)…
[NYT] – Will China Break? by Paul Krugman
“The obvious question is, with consumer demand relatively weak, what motivated all that investment? And the answer, to an important extent, is that it depended on an ever-inflating real estate bubble. Real estate investment has roughly doubled as a share of G.D.P. since 2000, accounting directly for more than half of the overall rise in investment. And surely much of the rest of the increase was from firms expanding to sell to the burgeoning construction industry. Do we actually know that real estate was a bubble? It exhibited all the signs: not just rising prices, but also the kind of speculative fever all too familiar from our own experiences just a few years back — think coastal Florida.”…
http://tinyurl.com/89zf64c
[ChinaDaily] – Beijing’s ‘English only’ town abandoned
“Visitors in the town are only allowed to speak English,” Wang Haichen, the head of the Miyun county government, said, as quoted in local media reports. Wang said every visitor in the town would get a “tourist passport,” and the ones who break the language rule would have points deducted as a punishment. However, some people said the rule forbidding visitors from speaking Chinese in the town demonstrated a worship of foreigners and discrimination against Chinese.”…
http://tinyurl.com/ceer7s2