The Most Unforgettable Real Estate Bubble of the Modern World

A real estate bubble or housing bubble or property bubble is a form of economic bubble that is characterized by a quick increase in prices/appraisals of real properties.  The most recent real estate bubbles that existed or currently existing are experienced by the following countries: United States, Spain, India, Britain, Italy, South Korea, South Africa, China, Greece, Israel, Ireland Canada, Romania, Poland, France, and Australia.  A bubble is almost certainly followed by a burst, or worse an economic crash.  There are so many factors that may cause real estate bubble and many ways to track them but experts say that the easiest way to identify a bubble is when it is about to burst, too bad.  Below are major and extraordinary bubbles that made historical events in the past decades:

• United States

No doubt that the U.S. is presently on the hot seat because of its upsetting housing bubble that is the talk of the town.  And why not, the economies of the world are affected one way or another, either to its advantage or the opposite.  The states of California, New York, Michigan, and Florida, the BosWash megalopolis, and the Southwest markets are said to experience the greatest effects of the housing bubble that started in 2005.  The said year, almost 1.3 million new houses were sold, a big difference to annual average of about 609,000 between 1990 and 1995.  The complexities of the US housing bubble are so severe that its economy is in the verge or already facing a recession.  Financial experts, politicians, investors, and even famous TV personalities are giving their own pieces of advice on what has been happening, how to survive, and what more to expect.  

• Japan

Considered to be one of the world’s most popular economic bubbles in history, the Japanese asset price bubble reached its highest point between 1986 and 1990 during which land and stock prices surged to a great extent and hit all-time low appraisal in 2003.  During the height of the bubble, it was joked that the land beneath the Imperial Palace in Tokyo is more expensive that the entire state of California.  Prime lands in the district of Ginza have reached US$1.5 million per square meter in 1989 while other areas have somewhat less prices.

• India

After the NDA coalition government made various interest rate reductions, increase in land property demand has been growing in major cities since 2001.  By the early 2004, Home Loan Rates fell to historical lows of 7.5% encouraging Indians especially the middle class to borrow and invest in their own homes.  Cities such as Bangalore and Delhi have recorded unprecedented real estate prices comparable to London.  But as of May 2008, prices of houses began slowing down severely in several major cities. 

• Spain

The real estate bubble of the late 1990s in Spain experienced almost 250% increased in land prices.  As of 2004, the government approximates that there are 300,000 demands for Spanish locals; 100,000 for foreigners living in Spain; another 100,000 for foreign businessmen; and 300,000 for stock.  By 2005, Spanish families have a current mortgage debt of €651,168,000,000 and this balance is continuously growing at annual rate of 25%.  The very high demands for real estate were attributed to low interest rates, government tax incentives for home ownership, and increasing consumer spending due to a healthy economy.  The government of Spain has already received warnings from the European Central Bank about possibility of real estate bubble emergence with other euro zone countries.