Guest Post: The Post-2009 Northern & Western European Housing Bubble

Tyler Durden's picture

Submitted by Jesse Colombo of The Bubble Bubble

The Post-2009 Northern & Western European Housing Bubble

Could Sweden or Finland be the scene of the next European financial crisis? It is actually far likelier than most people realize. While the world has been laser-focused on the woes of the heavily-indebted PIIGS nations for the last couple of years, property markets in Northern and Western European countries have been bubbling up to dizzying new heights in a repeat performance of the very property bubbles that caused the global financial crisis in the first place. Nordic and Western European countries such as Norway and Switzerland have attracted strong investment inflows due to their perceived economic safe-haven statuses, serving to further inflate these countries’ preexisting property bubbles that had expanded from the mid-1990s until 2008. With their overheated economies and ballooning property bubbles, today’s safe-haven European countries may very well be tomorrow’s Greeces and Italys.

The UK and London Housing Bubble


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UK housing prices have nearly quadrupled from the mid-1990s to 2008, briefly fell 20% in 2009 and have since rebounded enough to keep property prices firmly in the stratosphere. UK property prices are very overvalued, currently valued at 128% of their historic price-to-income ratio and 140% of their historic price-to-rent ratio. [1] In a pattern similar to France, the UK housing bubble (since 2008) has been primarily driven by price gains in the capital city of London. Prime London housing prices rose a hearty 11.4% in the 12 months to October 2011 [2], up 40% from their post-credit crunch low [3], while most other investment markets fell in a very volatile year.

Like Paris, the city of London has such a strong level of international “brand recognition” and a perceived safe-haven status that wealthy foreign investors are clamoring to buy property in prime areas such as central London. “London property is the ‘Swiss bank account’ of the 21st century,” says Robin Hardy, an analyst at London investment firm Peel Hunt. Rich people in places like Egypt, Syria and southern Europe are rushing to get their money away from the turmoil, and for want of a better alternative, they are plunking it down in the “millionaire’s playground” of central London. [4] The nouveau riche of China, India and other emerging markets are also keen on diversifying their wealth into prime Western property markets such as London, Vancouver and Manhattan, while one hedge-fund manager said that London property was a “laundromat for Russian money.” An entire generation is locked out of the city’s broken and outrageously-bubbled housing markets as the average Londoner would need to triple their salary to £87,000 to buy an average price property. [5] The prime London property bubble is highly vulnerable to the popping of the precariously-teetering China and emerging markets bubbles as well as job losses and decreasing bonuses for City of London financial workers. [6]

UK and London Housing Bubble Articles List


 The French Housing Bubble (incl. Paris Housing Bubble)

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After zooming 120% from 2000 to 2008 and briefly dipping 5.6% in 2009, French property prices have continued their inexorable march higher since late 2009. French property prices are strongly overvalued, currently valued at 135% of their historic price-to-income ratio and 150% of their historic price-to-rent ratio. [1] Though property prices are strongly rising throughout France, the French housing bubble is strongly driven by the Paris region, where prices have jumped 18% in 2010 and approximately 10% in 2011, up more than 40% since 2005. Some posh districts in Paris have risen at a 27% rate in 2011. [2] France’s housing bubble was goosed by a 2009 law that was meant to stimulate the housing market by creating a significant tax incentive for buyers. Mortgage rates that plunged from 6.5% in late 2008 to 3.5% in 2011 were another major catalyst for soaring property prices, causing fixed-rate mortgage lending to increase by 73% by early 2011. [3]

The French property market now has the dubious distinction of being the most overvalued in Europe and the third most overvalued market in the world, behind only Hong Kong and Australia [4], which have property bubbles of their own. The Paris-based OECD warned that “there is a risk that a prolonged period of easy finance could result in a price bubble,” which may endanger French banks [5], while Hervé Boulhol, the OECD’s France economist, warned against treating French real estate as a safe-haven and that the property market’s powerful rise without a corresponding rise in income “may signal a bubble phenomenon, as a bubble is a disconnection with fundamentals.” [6] Moody’s also issued a warning that the French property market was overheating and that the least cautious lenders could face steep losses in a more price severe drop. [7] By early 2012, the French property lending boom showed signs of an abrupt slowdown, with new mortgage loans dropping 25.7% in January 2012 (yoy) and a 49.4% drop in loans between December 2011 and January 2012. [8]

French Housing Bubble Articles List

The German Housing Bubble

While Germany was fortunate and sensible enough to have avoided engaging in the 2000s housing bubble folly with the rest of the world, Germans certainly seem eager to make up for lost time. The European Central Bank’s ultra-low key interest rate, while appropriate for the ailing PIIGS nations, is too low for faster-growing Germany resulting in negative real interest rates and fears of inflation. As is common in countries with negative real interest rates, German investors are pulling money out of low-yielding bank accounts and investments and plowing it into all types of real estate, causing prices to boom for the first time in a very long while. Property prices in Munich and Hamburg rose by more than 10% in 2011 [1] , while obscure fields and forests in northeastern Germany’s Uckermark region have soared by as much as 20 to 30 percent. [2] It is too early to determine if Germany is in the midst of a property bubble, but it is certainly a situation that warrants monitoring, especially if there is an improvement in global economic growth and sentiment.

German Housing Bubble Articles List

The Swiss Housing Bubble


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Global and EU economic turmoil have heighted Switzerland’s traditional economic safe-haven appeal, particularly due to the fact that Switzerland is not a part of the EU and has its own currency, the Swiss Franc. After suffering from a 1980s property bubble, Swiss property prices rose an average 42% since the year 2000, with prices doubling in some spots, for reasons similar to those of concurrent European housing booms. The median price for a house across Switzerland is now a California circa 2005-esque $850,000, $2.1 million in Zurich and an astronomical $2.55 million in Geneva. [1] Switzerland’s central bank (the Swiss National Bank), in an effort to stem the rapid EU-crisis induced rise in the Swiss Franc, cut interest rates to 0% and instituted a currency ceiling in the summer of 2011, creating alarmingly similar monetary conditions to those that caused Switzerland’s 1980s property bubble. [2]

In response to rising Swiss real estate prices, UBS launched a Swiss real estate bubble index, which hit a 20-year high in February 2012 [3], while the Swiss National Bank Chairman Philipp Hildebrand warned that, “A rise in real-estate prices is among the greatest threats to Switzerland’s economy.” [4] Most worrisome is the warning of Janwillem Acket, chief economist for Julius Baer Group Ltd. (BAER), who claims that Switzerland could experience its own version of the subprime borrowing crisis, saying, “People who shouldn’t be borrowing are now seriously considering entering the housing market.” [5]  

Swiss Housing Bubble Articles List

The Belgian Housing Bubble


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Belgium, which is the sixth-largest economy in the euro area and has not had a government in almost two years, has seen its property prices roughly double since the year 2000, barely pausing during the financial crisis in 2009. When property prices hit an all-time high in 2011, The Economist magazine included the Belgian housing market in a list of housing markets that were overvalued by 25% or more according to price-to-income and price-to-rent ratios and described the market as “more overvalued than it was in America at the peak of its bubble.” [1]

Belgian Housing Bubble Articles List

The Dutch Housing Bubble


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While Dutch housing prices have moderately deflated since 2008 after doubling since the late 1990s, they are still firmly in bubble-territory, according to a report by The Economist magazine. The Netherlands’ property market ranks among the most overvalued property markets in the world, overvalued by over 25% according to price-to-income ratio and price-to-rent ratios, common property-market valuation measures. [1]  Like many countries in recent decades, the Netherlands engaged in a mortgage-borrowing binge that sent property prices soaring, saddling Dutch households with a level of household debt that exceeds 240% of disposable income, the highest level in the euro zone by far. [2

Dutch Housing Bubble Articles List

The Luxembourg Housing Bubble


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The tiny country of Luxembourg has not been immune to the European property bubble epidemic as already lofty property prices have risen 11% since 2009 as mortgage rates fell 2.4% in Q2 2009, in line with ECB key rate cuts, from 4.5% in Q4 2008 [1]. By late 2011, year over year rent prices for houses have exploded by nearly 18% and 8.35% for apartments [2], causing people to flee Luxembourg city in pursuit of cheaper housing.[3] Luxembourg’s soaring cost of housing has caused its residents to sink deeply into debt, with the average household’s level of indebtedness up an incredible 172% since the year 2000. [4]

Luxembourg Housing Bubble Articles List

The Austrian Housing Bubble


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Austria’s housing prices are up a stout 60% since 2005, a rise completely unabated by the global financial crisis. Negative real interest rates and a relatively-low unemployment rate of 4.9% have encouraged Austrians to close low-yielding checking accounts and park their life savings in local property for rental income and capital gains. [1] Austria’s obvious property bubble poses serious risks to the country’s banks, which are already teetering on the brink after losing billions of euros in an Eastern European mortgage-lending scheme that has gone terribly awry since 2008. [2]  

Austrian Housing Bubble Articles List

The Danish Housing Bubble


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Although Danish housing prices have leveled-off after doubling from the late 1990s to 2008, prices are still thoroughly in nosebleed territory and are among the most overvalued in the entire world. Jes Asmussen, chief economist at Svenska Handelsbanken AB, claims that Denmark’s housing market may still be as much as 25 percent overvalued. [1] Denmark’s overleveraged banking system, with banking assets as a percentage of GDP at 454% versus the U.S.’s 90%, will experience unimaginable pain when the country’s housing bubble deflates in earnest. For all of the worry that Greece’s $462 billion sovereign debt has caused the world, Denmark’s ticking-time-bomb mortgage market alone is worth more than $500 billion, with nearly 70% of new mortgages being of the highly-risky adjustable rate variety (ARMs). [2]

Danish Housing Bubble Articles List

The Swedish Housing Bubble


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In a pattern similar to other Nordic property markets, Swedish property prices have nearly tripled since the mid-1990s and shrugged off the Great Recession woes to rise to incredible new heights. Swedish property prices are overvalued, currently valued at 120% of their historic price-to-income ratio and 140% of their historic price-to-rent ratio. [1] The most recent phase of Sweden’s housing bubble is fueled by mortgage interest rates that have fallen from 6% in August 2008 to a just above 3%, with adjustable rate mortgages falling to under 2%. [2] Tommy Waidelich, the Social Democrats’ economy spokesman, warned that Sweden may have a housing bubble and that "A drop in house prices would hit growth, employment and state finances” and also saying, "If the reason that the price is high today is only because investors believe that the selling price will be high tomorrow – when ”fundamental” factors do not seem to justify such a price – then a bubble exists.” [3

The IMF has also warned of a possible Swedish housing bubble, saying  "There is significant risk of a decline in house prices in coming years, even in a relatively benign economic scenario,” [4] while the OECD warned that Swedish housing prices are overvalued by about 30 percent in relation to income. [5] Robert Shiller, the economist who successfully predicted the popping of the Dot-com and U.S. housing bubbles, warned investors against treating Sweden and Norway’s markets as safe-havens as the Nordic region is caught up in asset bubbles that will end with plunging asset prices. [6] A Danish finance minister has even warned Sweden of the risks of its housing bubble, saying, “Do not make the same mistake as we did in Denmark,” [7] referring to the Danish property bubble that has been deflating since 2008.

Swedish Housing Bubble Articles List

The Norwegian Housing Bubble


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Norwegian property prices have tripled since the mid-1990s, up nearly 30% since the Great Recession as the oil-rich nation rode the coattails of the commodities bubble and has benefitted from the same “flight to safety” capital flows that have benefitted (and inflated bubbles in) other Nordic countries. Norwegian property prices are highly overvalued, currently valued at 125% of their historic price-to-income ratio and an incredible 170% of their historic price-to-rent ratio. [1] Norway’s Prime Minister Jens Stoltenberg admitted that he was “afraid” that the Norwegian property bubble might burst [2], while renowned U.S. bubble skeptic Robert Shiller said of Norwegian property prices, “This really does look like a bubble.” [3]  and that policy makers “should start worrying now because when the home prices get so high there’s a problem.” The euro area’s crisis has sparked “flight to safety” capital flows into Norway’s highly-desirable investment assets, pushing the Krone currency to undesirable export-harming heights and forcing the country’s central bank to cut interest rates to stem the inflow. Norway’s ballooning housing bubble is a side-effect of the nation’s excessively low interest rates relative to economic growth and inflation rates.

In February 2012, the IMF cut Norway’s growth forecast, saying that the Norwegian housing bubble is the country’s biggest economic risk and threatens everything from banks to economic growth. [4] Norway’s booming housing markets and cheap interest rates are encouraging households to engage in a typical bubble-style debt binge as private debt burdens are estimated to grow to about 204 percent of disposable incomes in 2012. [5] A  major risk to Norway’s economy  (and possible bubble-popping catalyst) that virtually no mainstream commentators have acknowledged is the very real possibility that oil prices might drop and sharply reduce the country’s oil profits and thus economic growth.

Norwegian Housing Bubble Articles List

The Finnish Housing Bubble

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Finnish property prices soared a dizzying 250% from the mid-1990s to 2008 [1], dipped slightly in the 2009 recession and bolted 20% higher as Finland and other Nordic countries recovered from the recession faster than their European neighbors to the south. The Finnish property bubble is being fueled by a mortgage market in which a jaw-dropping 90% of loans are of the highly dangerous adjustable rate variety, while banks are taking a page straight out of the U.S. housing bubble as they push reverse mortgages on their elderly customers. A Finnish bank advertisement for reverse mortgages even shows a cartoon person taking a vacation paid for with cash withdrawn from an ATM that is attached to their house! [See cartoon] It is as if nobody has learned a thing from the U.S. housing bubble – the saying, “those who don’t learn from history are doomed to repeat it” could not apply to a better scenario than the Finnish housing bubble.

Finnish Housing Bubble Articles List


It is simply mind-boggling that the world is back to blowing massive property bubbles so soon after the U.S. and peripheral European housing bubbles popped and caused such incredible economic carnage. The Western and Northern European housing bubble is proof that we are living in the era of The Bubble Bubble (a bubble of bubbles) as well as an era characterized by the most outrageous arrogance and hubris that humanity has ever experienced. The 2008 global financial crisis should have taught everyone their lesson once and for all, but we are clearly living in a world filled with excruciatingly slow-learners. More punishment is coming our way and will keep coming until we finally learn from our mistakes. Sadly, by the time we learn from our mistakes, it will likely be too late.

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Hugo Chavez's picture

With their birthrates dropping there is no way out. You need young people to keep your country stable, not a bunch of old codgers demanding what few young people are around work harder and take on more debt to fund codger bennies.

This is going to be a long kondratiev winter. Maybe my kids in middle age will see spring.

economics1996's picture

If we had capitalism birth rates among the over 100 IQ crowd would rise.  The biggest boner killer for the over 100 IQ crowd is socialism.

Seriously where did all this multiculturalism/socialism shit come from?

We all fucking know and we fucking know why. 

Sam Clemons's picture

I don't actually know... where?

economics1996's picture

Lazy mother fuckers who do not want to work.  Who else would promote that crap?

midtowng's picture

I can tell from your deep thoughts that you are obviously in the over 100 IQ range. [/snark]

samwell's picture

Zionazi Jews who love to divide and conquer the Goy!  and we fall for it everytime.

samwell's picture

who just happened to be a zionist christian doing the bidding of his israeli masters?

GoinFawr's picture

Small biotech... tw3lv3 monk3ys?

Fluffybunny's picture

And with the common people looking with increasing scepticism at EU and the value of the Euro, many are buying real-estate as it's still considered the safest investment that cannot go down. The atmosphere in the housing market has something very '00-'08ish about it.

General Decline's picture

Property would be a great investment if you could actually own some.

GoinFawr's picture

Mr. Wemmick has two words for you:

portable property.

"...when you pry it from my cold dead hands." C.Heston on one type of portable property with defensive capabilities.


Vampyroteuthis infernalis's picture

The only thing that the banksters know how to do is blow bubbles!

samwell's picture

the only thing the banksters are capable of doing is mistreating humanity for their own betterment.  they just can't help it because they are psychopaths whose brains are wired up wrong do to all of their inbreeding with each other.  It is a known fact that jews are some ofthe most inbred ethnic group in the world due to population bottlenecks in their history.  So, they suffer from diseases like Tay Sachs but they also suffer from malevolent abherrant psychopathy.  They are. incapable of experiencing empathy for another human being.  It is a well known fact that inbreeding has a tendency to create psychopaths over time.  That is exactly what we have here with the zionist bankster jews!

bartek's picture

"The 2008 global financial crisis should have taught everyone their lesson once and for all, but we are clearly living in a world filled with excruciatingly slow-learners."


Could it be that it has something to do with the quality of food and water supply? Just yesterday in the news from Poland: over a period of 10 years (!), up to 3 000 tons per month (!) of industrial salt (containing dangerous carcinogens and only to be used for roads and sidewalks and in chemical industry) was being sold to food processing plants as edible salt and introduced into the food supply.,1736338,0,1,3-tys-ton-niejadalnej-soli-miesieczni...

The trend is your friend's picture

Lets not forget the the asian property bubbles.  CHINA and INDIA.

whatsinaname's picture

I agree !! India is getting downright Stratospheric..

EmileLargo's picture

I have a lot of friends in India. While the prices are insane, your average buyer is not leveraged as I understand it. A lot of people often misunderstand how the property markets work in China and India. There is a lot of "black money" (illegal money mostly on which no tax has been paid) which is used to buy property. The transactions are usually at least 50 percent hard cash. If the market drops, the owners take a hit but the banks generally do not.

Secondly, India has had a print-happy central bank and government for years. If you run inflation regularly at 10 percent, debts get washed out in no time. This is why the usual metrics of price to income on property in India doesn't make a lot of sense because your average landlord doesn't have mortgage repayments to service out of rent. Property is simply a haven from inflation and taxation.

GoinFawr's picture

"Could Sweden (Norway-Ed.) or Finland be the scene of the next European financial crisis?"

Did you just feel that disturbance in the Force? Like millions of Libertarians and other assorted Ayn Randian acolytes all crying out at once,

"Yes!!! Oh Dear Ghod please let the answer be YESSSSS!"

Short ans. which of the nations listed above has GS with its fingers in her pie?




Hugo Chavez's picture


Oh god yes! Please let more social welfare states collapse!

I think I am about to come.

GoinFawr's picture

Hey, if it's pipedreams that float your boat, who am I to judge?

LowProfile's picture


You're really on a roll tonight bubala.  Don't stop!

prains's picture

what about the aussie and canadian housing bubbles?

GoinFawr's picture

irrelevant, not quite fiscally responsible and/or socialist enough to merit mention in this article. (Canada was close on that last one, but since last year when they elected a 'Conservative' majority gov't committed to Globalism their rhetoric pushes all the correct buttons)

Besides that, their national coffers are already a deep shade of red; misery loves company! Of course, you could argue that such profligacy would make them more susceptible but... y'know.

GoinFawr's picture

Uh, oh, if this survey extrapolates my neighbours only have a 9/16 chance of me being right about what they're up to.

Element's picture

Those are not bubbles damn it! 


(I'd better put a /sarc on that)

kito's picture

How about the "articles on bubbles" bubble?

AUD's picture

Yeah but housing is only the little brother of the biggest bubble of all...

That of 'money' itself - the obligations of government & their central banks.

Hugo Chavez's picture

I wonder if kondratiev cycles are just a small part of bigger supercycles.

The dark ages was one hell of a long downswing.

sickray's picture

property prices rise for different reasons, this could well be a bubble but is the mechanism actually the same as the us property bubble? can't see it mentioned anywhere...

Dr. Engali's picture

The globalist sure have done a good job of stripping this country of its wealth. They were very stealthy about it. They slowly extended credit to make up for the productivity they were stealing. Most people didn't even know what was happening because they had an illusion of wealth thanks to the credit. Now that the credit markets are broken they have moved elsewhere to plunder. Soon there will be nothing but pockets of wealthy people who can fly from luxury home to luxury home while the serfs in the servant economies who take care of them can't even afford to live in the same cities in which they work.

Yes_Questions's picture



Collapse.  Its whats for dinner, Abendessen, Deipno, dîner, engels, cena, jantar.

Caviar Emptor's picture

You know what "They" would hate? (TPTB)

If the huge numbers of people now unemployed, underwater, near the brink throughout the developed world just gave up on their hopless yuppie aspirations and simply focused on trying to make the world a better place. 

Oh man, that would rile them! That would shatter their globalist power dreams. It's their nightmare

Sean7k's picture

Just finished a great short essay by Etienne Boetie, "The Discourse of Voluntary Servitude". Written in the late 1500's but strangely relevant today and to your comment.

Caviar Emptor's picture

Interesting, @Sean. I'll look it up. Suddenly, the entire fabric of the power structure can disintegrate if everyone just stops being a "wanna be". 

Hugo Chavez's picture

As long as the top 0.001 percent keep us divided into red teams and blue teams this could go on a long time.

The xmas armistice of WW1 was an example of what the world could be like if we the commoners refused to obey our masters.

Caviar Emptor's picture

There are many, many examples of silent revolutions against TPTB down the ages, friend. And they took down powers that seemed unshakable at the time: Roman Emperors, English Kings, Feudal lords, just to name the most familiar. When the time is ripe, the forces are unstoppable. 

Yardstick of Civilization's picture

Not likely to happen today . . . we're all so sold on the idea that our lives are priceless that we've stopped demanding liberty and started cowering and just hoping for an opportunity to exist. Very few, if any, are willing to risk their priceless lives to effect a change in the status quo, and any movement at all in that direction in this day and age of digital spying where Google has identified every potential subversive would be quashed in a millisecond. I'm afraid to say that times have changed. Changing the changed times will require an outside force. Chinese nuke, bio weapon, etc.

Caviar Emptor's picture

When it seemed impossible before, it happened. Having little to gain by participating and little to lose by quiting is inducement enough 

Yardstick of Civilization's picture

Hope you're right and that it happens in my lifetime. Is there a signup sheet going around?

Hugo Chavez's picture

Clean and oil your grandaddys deer rifle. Replace the firing pin. Get a hundred dollar sniperscope from practice.

If the afghanis even had cheap old deer rifles with scopes we woyld be in serious trouble. The ability to make a 400 yard shot with all the cover available in urban and suburban areas is ten times more important than rapidity of fire.

alesarte's picture

Urban areas...  planning on eating your neighbors?

Hugo Chavez's picture

I disagree.

That same hotheaded five percent that is in the thick of all revolutions is still around.

We have rapid desimination of knowledge and force multipliers now. Of course the set piece military battle or seige cant be won. There are plenty of other ways to make an area ungovernable.

LowProfile's picture

Not to mention you need the military on board.  They really fucked up when the shot that Marine in the face.

400 yards for those guys, no scope? No problem.

gwar5's picture

They want you to feel that it is too daunting to overthrow them. Their greatest weapon is to beat us down psychologically, using the money system to make us scared about where our next meal is going to come from.  It's a tried and true Psyops. That's what they're doing to Iran right now to soften them up. 30K drones and the NDAA in the USA? ... just more of same.

Never forget that we are the sovereigns and the only true authority for what will/can happen and they know it.  The last thing they want to do is remind us that we are their sovereigns and we can kick the elites to the curb and revoke the Federal Reserve Act if we want.  They are trying to make us voluntarily surrender our authority by acting as if we don't have any authority. We possess all the authority. They are criminals hanging by a thread.

If the Main Stream Media were like ZH, instead of Leni Refienstahl, the masses would already be routing them with pitchforks.