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Author Topic: So... is there any country left without a real estate bubble?  (Read 4487 times)
jubalix
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September 28, 2013, 12:45:13 PM
 #21

It goes from bad to worse in Australia.

Sydney just going up again, the most it ever fell was about 1-2% per year if that, then goes up 10% a year, 5% a year....it just never stops

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theonewhowaskazu
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September 29, 2013, 07:01:35 PM
 #22

I love this. When its a non-inflationary asset like real-estate, gold, Bitcoin, or sorta-maybe stocks, a price increase = bubble.
When its a consumable like food, price increase = inflation.

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September 29, 2013, 10:35:53 PM
 #23

I love this. When its a non-inflationary asset like real-estate, gold, Bitcoin, or sorta-maybe stocks, a price increase = bubble.
When its a consumable like food, price increase = inflation.

You've answered your own question.
Consumables don't form bubbles (except in times of hoarding), because they are consumed, not resold.
A bubble occurs when an asset is bought, not for its inherent value or utility, but purely for the belief that it can later be resold at a profit to another buyer.
Eventually the market runs out of buyers at the ultimate elevated price, and the bubble bursts.

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jubalix
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September 30, 2013, 07:17:54 PM
 #24

I love this. When its a non-inflationary asset like real-estate, gold, Bitcoin, or sorta-maybe stocks, a price increase = bubble.
When its a consumable like food, price increase = inflation.

You've answered your own question.
Consumables don't form bubbles (except in times of hoarding), because they are consumed, not resold.
A bubble occurs when an asset is bought, not for its inherent value or utility, but purely for the belief that it can later be resold at a profit to another buyer.
Eventually the market runs out of buyers at the ultimate elevated price, and the bubble bursts.


but only if the buyers sell at a lower price than they purchased + normal inflation, they can bust hold, so the "bubble" does no burst those prices become the new normal.

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dragonkid
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September 30, 2013, 07:20:52 PM
 #25

So... is there any country left without a real estate bubble?

Planning to buy some property to live on but I'm not sure if I should do this in my own country (Germany).

I think the north pole don't have a real estate bubble. I am not sure if Germany have any land in the north pole.

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September 30, 2013, 07:41:29 PM
 #26

I think the north pole don't have a real estate bubble. I am not sure if Germany have any land in the north pole.

No, but at the South Pole, apparently.   Shocked

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murraypaul
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September 30, 2013, 10:49:37 PM
 #27

but only if the buyers sell at a lower price than they purchased + normal inflation, they can bust hold, so the "bubble" does no burst those prices become the new normal.

If they bought with their own money, yes.
But another characteristic of a bubble is that past a certain point it becomes widely known, and everyone starts jumping in.
And some of them don't have enough capital of their own, so they borrow it.
And some don't have enough income to pay the full mortgage cost, so you get houses bought on interest-only mortgages, or houses bought as buy-to-let.
When the interest rates get too high, or the saturation of rental properties means that you can't keep the property fully occupied, then you find you can't make the mortgage payments, and have to sell at a loss.

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Taras
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October 01, 2013, 01:11:53 AM
 #28

Antarctica
This.
jubalix
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October 01, 2013, 09:15:37 AM
 #29

but only if the buyers sell at a lower price than they purchased + normal inflation, they can bust hold, so the "bubble" does no burst those prices become the new normal.

If they bought with their own money, yes.
But another characteristic of a bubble is that past a certain point it becomes widely known, and everyone starts jumping in.
And some of them don't have enough capital of their own, so they borrow it.
And some don't have enough income to pay the full mortgage cost, so you get houses bought on interest-only mortgages, or houses bought as buy-to-let.
When the interest rates get too high, or the saturation of rental properties means that you can't keep the property fully occupied, then you find you can't make the mortgage payments, and have to sell at a loss.


well no, not in Australia,

when the interest rates get to high, the gov makes the banks find other arrangements. Beyond a small percentage the gov will not allow/can not survive wide scale repossessions.

then there is negative gearing, and

taxation that feeds through in to centrelink/social services the guarantees the bottom part of the market and support st he rest

Their is no capital gains tax on your family house when you sell

It is far more costly to have people on the street and an empt house en masse..

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superresistant
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October 01, 2013, 09:27:10 AM
 #30

I'll go to Spain soon. I saw a documentary saying that some price went down to 60% of the value.
murraypaul
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October 01, 2013, 11:51:46 AM
 #31

well no, not in Australia,

Not yet.
But Australian houses are historically overvalued, and indeed are starting to fall.



Indeed they are dropping back to the long term trend, and that drop will overshoot, as it always does.



If there is anything we should have learned by now is that government action cannot ultimately prevent market corrections.

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theonewhowaskazu
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October 02, 2013, 05:09:44 AM
 #32

If there is anything we should have learned by now is that government action cannot ultimately prevent market corrections.

Depending on how you think about it, they almost can. To prevent a downward correction, they can just print loads more money boosting their fiat-denominated value to where it was pre-correction. To prevent an upward correction, they can just raise property tax.

superresistant
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October 02, 2013, 07:16:16 AM
 #33

If there is anything we should have learned by now is that government action cannot ultimately prevent market corrections.
Depending on how you think about it, they almost can. To prevent a downward correction, they can just print loads more money boosting their fiat-denominated value to where it was pre-correction. To prevent an upward correction, they can just raise property tax.

That's why ultimately, fiat money have no value.
theonewhowaskazu
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October 02, 2013, 02:45:22 PM
 #34

If there is anything we should have learned by now is that government action cannot ultimately prevent market corrections.
Depending on how you think about it, they almost can. To prevent a downward correction, they can just print loads more money boosting their fiat-denominated value to where it was pre-correction. To prevent an upward correction, they can just raise property tax.

That's why ultimately, fiat money have no value.

Exactly. The way the government can prevent a correction is by effectively taking money from those that participate in the correction. If the natural correction would be downward, the government inflates money, devaluing the money of whoever would sell. If the natural correction would be upward, the government  taxes the land, devaluing the investment of whoever would buy. So much for free market.

It is for this reason that I believe that naturally a value added tax would actually be one of the more fair forms of taxation, depending on the way it is implemented. Most other forms of taxation serve to force the public into a situation that isn't a natural market condition. VAT, or at least, the concept behind it, is somewhat neutral in that respect.

manfred
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October 09, 2013, 06:17:08 PM
 #35

Depending what you want to buy, but Ukraine would have to be considered. China just bought 5% of total Ukrainian land, its about the size of Massachusetts.

http://www.channel4.com/news/china-ukraine-farmland-food-security-investment-overseas
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October 09, 2013, 07:39:36 PM
 #36

Spain. It has had its price crash. Buy foreclosed real estate directly from the banks. They will accept offers below the asking price.

Spain also has the advantage that there are parts with a pleasant climate, coastal views and great beaches.

I would watch out for future taxes though. Spain recently required its tax cattle to declare all their assets (property, stocks, etc). For now there is no extra tax levied on those assets, but why do you think they are collecting the data now?
The question is not if Spain breaks up, but when. Catalonia is the first region, others will follow, which means real estate prices have potential to really fall.
pand70
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October 09, 2013, 07:50:50 PM
 #37

I don't understand.
The OP is looking for a country with a real estate bubble or not?
And if he wants a house to live in (not to invest in real estate) why the bubble matters?
 Huh

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October 10, 2013, 10:15:58 AM
Last edit: October 10, 2013, 10:26:27 AM by superresistant
 #38

I don't understand.
The OP is looking for a country with a real estate bubble or not?
And if he wants a house to live in (not to invest in real estate) why the bubble matters?
 Huh

The bubble matter because you want to buy after it exploded.

You don't need to own the house/flat you live in, you can rent (to someone) some houses/flats that you previously bought after a bubble exploded and use this income to rent and live anywhere you want. This allow you to live in a place with a big bubble estate without getting fucked when it burst.
Johnny Bitcoinseed
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October 10, 2013, 11:59:35 AM
 #39

I've heard good things about Chile - plus the southern hemisphere is less exposed to radiation from nuclear power plants (think of the US west coast and Japan) and potential nuclear war and all that good stuff.

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October 10, 2013, 12:37:26 PM
 #40

I've heard good things about Chile - plus the southern hemisphere is less exposed to radiation from nuclear power plants (think of the US west coast and Japan) and potential nuclear war and all that good stuff.

and all that "good" stuff Chile is away from includes earthquakes?

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