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Global house prices

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Mar 3rd 2011, 12:45 by The Economist online

Our interactive overview of global house prices and rents reveals the world’s most overvalued homes



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Faedrus wrote:
Mar 3rd 2011 4:21 GMT

Hey everybody! The spammers are back!

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ZeFox wrote:
Mar 3rd 2011 10:25 GMT

In Switzerland a pocket-size country with one of the highest per-capita income in the world, prices went up 50% over 25 years. In Australia, a fantastic place and one of the least populated countries, prices increased over sixfold. The tax regime in Switzerland discourages home ownership but virtually frees of capital gains tax any capitalistic risk taking. Meahwhile Australia encourages home ownership, has a crumbling infrastructure and next to no industrial sector left. As long as the Chinese are benevolent, Oz is safe, but it would really be worthwhile to change focus and for Asutralian politicians to grow some brains instead of just testosterone.

Jinraysion wrote:
Mar 4th 2011 3:26 GMT

Hi
I want to say something about houses prices in China as a postgraduate. The prices is too high to buy for a graduate who working 10 years in a second-scale city. If you choose woking in Beijing and shanghai, maybe you should spend your lifetime to buy a house. That's the slave of house. The reasons why the prices are overvalued? I think the main reasons include: estate developers'manoeuvre ,wealthy'speculation , lots of people swarm into citys.

Tony L.K.H wrote:
Mar 4th 2011 6:26 GMT

It is surprising to find that Hong Kong and China have the highest house-price index if one shortens the time horizon of the chart. I assume it will be the reason for a recession/depression like Japan in the 1980s. High rising property price is always a hint for a business cycle. Take a look at the recent subprime mortgage crisis.

lesslunacy wrote:
Mar 4th 2011 2:26 GMT

This current 2008 crises started by a combination of deregulation and up rising housing values. When the housing bubble burst, banks threatened to go belly up? The banks were playing rent a house beyond the respective public means. Banks should base a loan on ability to repay, and not the secondary last resort of collateral. Banks going under for housing prices makes about as much sense as banks running into trouble over the automobile corporations troubles. We have deflation in the housing industry now and that should be a good thing because of the elevated standard of living.

A similar thing happened in 1929. The debt/equity ratio or margin requirement was only 10%. One can buy $1,100 worth of stock with an investment of $100 and a $1000 loan from the bank. If the investment stock(s) goes up 11%, the investor doubles his investment value; and if the investment stock(s) goes down 11%, the investors at risk amount is lost entirely and any greater loss in the stock market threatens the "conservative" liability of the bank. The stock market went down 12%. Banks failed.

Trouble Asset Recovery Program (TARP) exchanges all the "worthless" stock of a corporation in exchange of the FEDs to assume the all liabilities of the trouble corporation. So as to leave retained earnings after the FEDs following IPO, the treasury should charge only for their expenses plus interest. As with the economy in the 1930's, the economy in the 2010's is suffering because Spacely Sprockets needs a loan to obtain a sprocket press, but the bank is unable to make the loan. We have business and population, but without banks, the result is unemployment.

Paraphrasing FDR, "Who's next to try to make a run on the bank next." Seriously the year following an economic downturn is the strongest in terms of capital gain and increase in dividend of the stock market. We just had that great year in 2010, but with unemployment at 9.0% and the dollar falling vs foreign currencies, there is no reason to assume 2011 won't be also as great a year for the stock market. High equity prices will put property, plant, equipment, and intellectual property on the floor of Cogwel Cogs just as well as the low cost of borrowing. Especially with the dollar falling, the best deal in the Bazaar defined matching tax free defined contribution 401K. As long as the book value of assets the bank assumes is large compared to the liabilities the banks assumes, banks should remain healthy.

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