Thursday, August 18, 2011

Checking in on Other Housing Bubbles

The wonderful Economist continues to update their Clicks and Mortar interactive chart.

Compared to rents, let's take a look at who is the most vulnerable.

Elevated house prices relative to rents: Britain, France, Sweden, Australia, Canada
If the markets continue their plummet (for a quick sobering up, see Turning Japanese: SPX vs Nikkei Index (10 Year Lag)) a second looming credit crisis is going to be felt disproportionately by some consumers, specifically in countries with elevated house prices.

The U.S. and Ireland have almost worked through their house price correction. Others are still flying high on Icarus wings.

On another note, I've been seeing lots of articles with this spin:
Slow stock markets help fuel Asian real estate boom
Especially in Australia. Is the investment market so distorted by policy that this is more than wishful thinking? Were they all asleep in 2008 when the credit bubble that fueled the price gains in the first place popped and the spattered remains froze and shattered? We're still in the same crisis, guys. I've been pondering the thesis in these articles, but just can't see it as anything other than belief in a fairy godmother.

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