Connect with us

Five years later, Housing bubbles are back

It is widely agreed that a series of collapsing housing-market bubbles triggered the global financial crisis of 2008-2009, along with the severe recession that followed. While the United States is the best-known case, a combination of lax regulation and supervision of banks and low policy interest rates fueled similar bubbles in the United Kingdom, Spain, Ireland, Iceland, and Dubai.

Published

on

Singapore Skyline

It is widely agreed that a series of collapsing housing-market bubbles triggered the global financial crisis of 2008-2009, along with the severe recession that followed. While the United States is the best-known case, a combination of lax regulation and supervision of banks and low policy interest rates fueled similar bubbles in the United Kingdom, Spain, Ireland, Iceland, and Dubai.

Now, five years later, signs of frothiness, if not outright bubbles, are reappearing in housing markets in Switzerland, Sweden, Norway, Finland, France, Germany, Canada, Australia, New Zealand, and, back for an encore, the UK (well, London). In emerging markets, bubbles are appearing in Hong Kong, Singapore, China, and Israel, and in major urban centers in Turkey, India, Indonesia, and Brazil

Signs that home prices are entering bubble territory in these economies include fast-rising home prices, high and rising price-to-income ratios, and high levels of mortgage debt as a share of household debt. In most advanced economies, bubbles are being inflated by very low short- and long-term interest rates. Given anemic GDP growth, high unemployment, and low inflation, the wall of liquidity generated by conventional and unconventional monetary easing is driving up asset prices, starting with home prices.

The situation is more varied in emerging-market economies. Some that have high per capita income – for example, Israel, Hong Kong, and Singapore – have low inflation and want to maintain low policy interest rates to prevent exchange-rate appreciation against major currencies. Others are characterized by high inflation (even above the central-bank target, as in Turkey, India, Indonesia, and Brazil). In China and India, savings are going into home purchases, because financial repression leaves households with few other assets that provide a good hedge against inflation. Rapid urbanization in many emerging markets has also driven up home prices, as demand outstrips supply.

via Nouriel Roubini warns that policymmakers are powerless to rein in frothy housing markets around the world. – Project Syndicate.

Click to comment

Leave a Reply

Asean

One-stop SME information portal connecting ASEAN businesses and beyond

The ASEAN Access is a flagship initiative of the ACCMSME, spearheaded by the OSMEP, Thailand and supported by the Federal Government of Germany and the German Agency for International Cooperation (GIZ).

Published

on

 the ASEAN Coordinating Committee on Micro, Small, and Medium Enterprises (ACCMSME) launched ASEAN Access, a one-stop business information gateway for international-oriented businesses to expand their market outreach within the ASEAN and beyond.

(more…)
Continue Reading

Companies

Novo Nordisk certified as one of the Best Places to Work in Thailand

Novo Nordisk Thailand certified as one of the Best Places to Work. An exclusive interview with John Dawber, Vice President and general manager who provides insight into what makes the organization an employer of choice

Published

on

Novo Nordisk Thailand, affiliate of the global healthcare company with more than 90 years of innovation and leadership in diabetes care, has been recently recognized as one of the best companies to work in Thailand.

(more…)
Continue Reading
Wise

Most Viewed

Subscribe via Email

Enter your email address to subscribe and receive notifications of new posts by email.

Join 14,097 other subscribers

Recent