Guest Post: Unpopped Housing Bubbles Abound

Tyler Durden's picture

Submitted by Charles Hugh-Smith of OfTwoMinds blog,

History suggests that we can anticipate the eventual popping of all remaining housing bubbles.

Though much has been written about the popping of the housing bubble in the U.S. and Ireland, remarkably little has been written about the many housing bubbles that remain unpopped. As a rule, speculative bubbles pop and revert to their pre-bubble levels, so we can anticipate the eventual popping of all remaining housing bubbles.
David P., proprietor of the excellent Market Daily Briefing blog, recently shared two charts depicting housing markets in the European Union. David explains his methodology of dividing the EU housing markets into two groups (EU Property Bubbles):

Many nations in Europe have had a property bubble, but only Ireland has officially had a bubble pop. Spain is currently in process of acknowledging their bubble pop, but many other nations in the eurozone appear to have had similar-looking housing price growth yet have not officially acknowledged their bubble price moves. 

The different eurozone nations were split into two groups; states with property bubbles, and states without. Criteria for a bubble is property prices doubling within 10 years. The selection was relatively easy in most cases - the only borderline case was Italy, where they had property prices rise "only" 66% over 8 years. There are two notable cases: Belgium, where prices have gone up 243% since 1998 and are still at that lofty level, and France, where prices have risen 263%, and no correction has yet occurred. 

The data comes from the ECB, but is collected by each member nation. They are index values, with the 100 value set generally to one of the years between 2007-2008. Some of these series update annually, some monthly, and some quarterly. It is a mix of data; some use only existing homes, others use existing and new homes. Data availablity varies between nations; every attempt was made to select the best series. To provide a "bubble baseline", the US Case Shiller 10-city index has been normalized with early 2006=100 and added to each graph.

Here are David's charts:
Notice that Ireland's decline tracks a classic bubble pop; the U.S. decline was stopped by gargantuan Federal subsidies (3% down payment loans passed out like candy, etc.) and Federal Reserve intervention (zero interest rates and $1+ trillion purchases of mortgages). Spain and The Netherlands have rolled over but still have a long way down to reach pre-bubble levels.
Belgium and France prove that "stone" (real estate) is still a popular investment, especially when credit money is sloshing around (see chart below).
Austria and Germany are playing catch-up in the housing bubble game--better late than never. Perhaps capital is fleeing risky EU locales and finding a home in German and Austrian real estate.
These two charts reveal the driver of the EU housing bubble and its piecemeal devolution: massive credit expansion, and a sharp decline in credit growth:
Housing bubbles are not limited to Europe, of course; here is David's chart of the Australian housing bubble:
Given the dearth of investment options open to households in China seeking to invest their prodigious savings, it is unsurprising that China's housing bubble continues expanding. Every proponent of housing during bubbles confidently proclaims that "this time it's different," and a decade later the dazed survivors shift through the financial rubble, wondering what went wrong with "guaranteed" fundamentals, trends, valuations, collateral and wealth.

Roundtable discussion with CHS, Gordon T. Long and Bill Laggner: China, Japan & Central Banking (25 Minutes, 34 Slides)


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francis_sawyer's picture

When did the concept of a home as an 'investment' or 'appreciating paper like asset' take hold & WHO was responsible for pushing that agenda?... No WAIT... Don't answer ~ Let me take a wild guess...

Another Texan's picture

The land your house sits on is the investment.  The structure is a depreciating asset. 

tickhound's picture

Fuck ya bitch suck it.

No wonder the guy was basically pimpin' for Fed $ injections into everybody's mailbox.

prains's picture

My name is Ben WhosgonnaspankMe


and i don't approve of this message

tickhound's picture

Yeah I got sucked in to the hysteria, the excitement.  Bummer. 

ebworthen's picture

I think it's a viral hoax about Krugman.

Too bad.

whatsinaname's picture

Dont forget India's housing bubble - some folks even selling some gold to "invest" into the property boom even if it breaks their backs making those monthly payments to the bank.

fonzannoon's picture

Sorry for the OT but...Fuck off McCain.

WASHINGTON -- One of the Senate's leading hawks, Sen. John McCain (R-Ariz.), took to the Senate floor Thursday to fire back at Sen. Rand Paul (R-Ky.), saying the Kentuckian's rant against extrajudicial drone killings was "simply false."

McCain said it was "ridiculous" and "a stretch of the imagination" to "allege or infer that the President of the United States is going to kill somebody like Jane Fonda, or somebody who disagrees with the policies."


"On May 13, 2009 Senator John McCain called me. McCain had given a eulogy at Pat's memorial service and was instrumental in pushing for the third investigation of Pat's death, but I hadn't heard from him in several years. I have always believed Pat's case was politically awkward for him, and so he'd chosen to distance himself from the entire affair. I was surprised to hear from him. He said he was contacting me to see if I wanted to give him questions that he could pose to McChrystal at the hearing, which I was willing to do until I learned that McCain was already publicly endorsing the McChrystal appointment before the hearing even began. I let the senator know I wouldn't be sending him any questions, as I feared they would be used to prep McChrystal, rather than to put him on the spot. McChrystal's appointment was approved.

On June 22, 2010, General Stanley McChrystal was forced to retire after remarks he and his staff made to Rolling Stone reporter Michael Hastings. I was contacted by several reporters and asked to give my thoughts on the subject but I declined to comment. I hadn't read the piece in its entirety at that point, so it seemed inappropriate to say anything. I got the sense a few of the reporter wanted me to say, 'I told you so,' but I was uncomfortable with that.

A day after the story broke I read the full Hastings article. I found myself feeling strangely validated. The "Runaway General" is exactly the arrogant individual I thought him to be. President Obama had no choice but to relieve McChrystal of his command. How sad that the President and Congress didn't properly scrutinize him a year ago.

Over the last five years the Pentagon and Congress have had numerous opportunities to hold accountable those responsible for the cover-up of Pat's death. Each time they've failed.

The government didn't just lie to us; it lied to a nation.

otto skorzeny's picture

McCain is stone old crazy and maybe a failed Manchurian Candidate. I hate O-but we'd probably be dead from WWIII if McCain made it to the WH

akak's picture

With those stuffed-for-winter chipmunk cheeks of his and those little T-rex arms waving around frantically as he calls for bombing here and bombing there and bombing everywhere, I always suspect that McCain is the result of some insidious government trans-species genetic experiment gone horribly awry.

prains's picture

He's Sigourney Weavers illegitimate alien clone found in a test tube tucked safely up Dick Cheney's ass for safe return to earth and inseminated by Rummey on a dark and stormy night off the coast of nantucket. It was really dark but only a little stormy

August's picture

Transgeneic individuals everywhere resent your invidious insinuations of some sort of commonality with Mr. McCain.

akak's picture

My sincere apologies, to all three of your heads.

McMolotov's picture

And to think the media tried to pass McCain off as some kind of "maverick." He's as establishment as they come. If elected, would the welfare state have grown under McCain? Would the warfare state have grown? Would civil liberties have come under assault?

The answer to all these questions is yes, which is precisely why he was put forward as a candidate. The agenda is always to increase the power of the State regardless of which "party" is in control. I have my own doubts about Rand, but he managed to piss off all the right people with his filibuster, so that earns him some points in my book.

p.s. Let's not forget McCain was one of the Keating Five. He's scum.

Spastica Rex's picture

How many planes did he crash?

McMolotov's picture

Obviously not enough, but I do kind of enjoy the stumpy arm thing.

TheFourthStooge-ing's picture


How many planes did he crash?

Not enough, seeing as he's still around.

Dr. Engali's picture

I wish those old fuckers would just take their stolen fortunes and get the fuck out. Why is it that criminals like McCain and Graham seem to hang on forever?

Harbanger's picture

Didn't McCain call the Tea party hobbits? what's the surprise.  These fuckers ARE the Republican ruling class.  That's why people say there's no difference between the 2 Parties.  Except for a handful of fringe Repubs, Obama and the Democrats are completely unopposed.

TheFourthStooge-ing's picture


Why is it that criminals like McCain and Graham seem to hang on forever?

They're the turds that won't flush.

Joseph Jones's picture

Understatement of the day, maybe the year, maybe in the history of ZH.  MSM heap only more and more love each day on these two scum bags.   

marathonman's picture

I can't believe that McCain went through torture in Vietnam and came back and transformed himself into this character.  It would seem the Vietnamese had stripped the character from the man.  Sad really.

Cognitive Dissonance's picture

I have often wondered if he did not go thoroughly mad and has never recovered.

However, not all insanity is debilitating. In fact, for many it is invigorating. Just look around you. We are all mad as hatters, yet that doesn't stop us from going about our daily business and in many cases thriving in the process.

ChanceIs's picture

Didn't McCain get his dick caught in the S&L zipper way back when?

You do have to admire McCain for the torture he withstood back in Viet Nam.  It doesn't make Viet Nam any less stupid.

BTW:  I am very big on a strong military, and having it at the ready bacause you never know.  But you have to be sensible about when you use it.  You after we got to watch the former USSR commit suppuku over Afghanistan you would have theought that we would have been satisfied to make a statement by only sending a few flights of B-52s over the poppy fields - once a month for a few years.  Ground troops????

Waterman Jim's picture

Dont ask Perot what he thinks of Mccain.


max2205's picture

lots of dead bodies trying to pick the top of those markets....MOAR

Bay of Pigs's picture

Canada is in bubble territory as well. They are here in Maui in droves buying everything in sight too. 92% of total sales last quarter of 2012 were Canadian.

NEOSERF's picture

Interesting...probably spillover to the "recovery" in CA and Las Vegas...Canadians..who'd thunk.

mirac's picture

a Maple encrusted bubble...signed a Canadian who does not own a home

OutLookingIn's picture

Ah yes, Maui.

Known as; 'Little Canada.'

Just as Florida is known as 'Le petite Quebec' and Arizona (Scotsdale) where 'Snowbirds' land before Winter.

The Canadian housing market started sliding down about a year ago and you can now hear the air escaping from the bubble - getting much louder. Thats why the CMHC (Canadian Mortgage & Housing Corporation) is backed by the tax payer in the form of government loans and guarantees. With the Bank of Canada keeping mortgage rates ultra low and backing all new mortgages.


Notarocketscientist's picture

Hong Kong has doubled in just a few years

kevinearick's picture

Investment Banking OxyMorons

Next, the idiot orators are going to pass a statute prohibiting any male, not getting direct deposit from a public, private, or non-profit corporation, from taking a piss in the morning, without meeting 7 billion to-be-determined conditions, subject to wealth confiscation and imprisonment, if not completed in a timely manner, as determined by the Treasury rocket scientists…while they circle the Mohave for 40 years, penning a one million word statute giving the investment banks, themselves, exemptions by preference from the Volcker rule.

Investment banks don’t do anything. They spend money, given to them by the Fed, themselves, to expand the artificial supply and demand economy. That’s it. If a hedge fund, a church, or a firefighter “buys” your property for 20 cents on the dollar, sells it later to a like-minded reptile for 120 cents on the dollar, resets the system, and the Fed ignores the intermediary transactions, except to provide negative real interest rates to the preferred stock, why do you suppose housing prices don’t fall on a nationwide /global basis for a protracted period of time?

Hire more cops, write more tickets, build more jails, bankrupt your neighbors, and steal their property – the American XYZ Empire Dream, on a global dc chip, distributed into everyone’s Smartphone, so everyone can report on everyone. Stupid is as stupid does, in a positive feedback loop.

The last thing a man is going to tolerate is government pulling on his d- first thing in the morning and telling him that he can’t piss until he builds a golden latrine for everyone in the majority. If you want to build Krugman a bigger Keynesian platform to spout his bullsh- from, do it with your own labor.

Winning the lottery is finding someone to love who will love you back, as an example to your children in a community that honors the product, as a privilege, not a right executed by law. Funny, it happens everyday, all over the world, with no emperor involved, and the empire participants cannot abide it. Now hand over your kids quietly, so the homosexuals have equal rights to nature’s yield, or go to jail.

The solution is not to follow others into the casino / bridge-to-nowhere at the first or any subsequent crossroad.

Boston's picture

Let's not forget the Canadian housing bubble......

Jack Burton's picture

A giant housing bubble has many winners.  The winners really clean up during the inflation period. Many grab the gains and are pretty well placed when the bubble blows up. The losers would be anybody who bought in once the bubble was wwell underway. That would be all the under water folks right now. I personally know of people who paid enormous sums for your average house and took massive loans figuring that the price of the asset would keep going up well past their entry point. WRONG!

It is hard to feel sorry for the buyers when the bubble was obvious. I was in the market for a home after a divorce and setting up on my own again. I owned a very slummish house but in an up and coming area. I priced homes and found them all asking way over value. My solution was to take advantage of the property my old slum house was on, very close to Lake Superior, and tore it down. Then got a good contractor and set about building a new custom house that was very modest in size and built to a reasonable budget. I ended up with a brand new cottage type house in an area due for redevelopment and prime for vacation home building. Had I chosen to buy an existing home, the price tag would have been only about 25K under what I built brand new for.

Older homes at sky high prices was just nuts. In 2005-6, people wanted a fortune for old homes with bad wiring, bad plumbing, bad roofs and leaky basements. Screw that! I can't believe how many people took huge loans out and now are deeply underwater on old houses needing much upkeep. The bubble really killed some folks!

mirac's picture

a Herd mentality, I heard...

DblAjent's picture

CNBS is REALLY pushing the "hot" US housing market today.

Geeez - all day they've had "experts" puking their spiels about being the most bullish in years and RE agents saying "We can't find property for buyers!"

To what BS lengths are they willing to go???

Super Marco's picture

Maybe somebody needs to unravel there MBS's

Accounting101's picture

The Detroit News ( )has a piece up that states according to the Federal Reserve, 98% of my lost wealth since 2007 has now returned. With the rising equity and housing markets the illusory wealth effect is back. Fake wealth is always fun to have. Off to the casino!

Jack Burton's picture

CNBS? With consumer incomes stagnant the new housing bubble is rocketing into space! This boom will blow up on the launch pad!

kalasend's picture

How about these re-popping housing bubbles?

SheepDog-One's picture

'Real estate', the supposed 'real wealth' that you never actually own.