The US isn't the only country with housing problems
Living here, most Americans would think the US is the only country in the world having a housing problem exacerbated by a subprime crisis.
(UK housing appreciation)
Real estate prices globally have had similar appreciation rates, and lenders around the world (with the possible exception of France) created similar products to facilitate home buying and investing. The "housing boom and aftermath" is actually a global phenomenon. Any US media attention on the impact of the subprime debacle on other countries has been isolated to their foreign investment exposure to the collateralized debt obligations (CDOs ) used to secure subprime loans.
So, did you know other countries are struggling as much as the US? My initial reaction was other countries would likely have tighter lending restrictions or government controls, so they wouldn't have significant subprime or alt-A type liberal lending issues. I google checked some sample queries like "France housing bubble" and couldn't find any citations by US media on what's going on outside our borders... just subscribing the feeds to the Economist, BBC, Financial Times provides a more global perspective and reality check.
Actually, the global housing markets parallel what is happening in the US... it depends on the location. Markets like Spain / California Central Valley that were boom markets are collapsing because household income levels can't support the mortgage debt, but markets like Latvia and Texas that didn't participate in the hysteria of the last five years are doing well, even booming. Global Property Guide, a leading source analyzing global real estate markets (based in the Phillipines btw) provides an update on the latest "hot or not" countries.
Here's what I found out about housing market problems overseas:
Europe
- I discovered wherever there are real estate bubble blogs, there is a lender crisis. House Price Crash UK details and analyzes the British housing bubble very similar to the US's Patrick.net.
- British foreclosures are climbing - Guardian Unltd. August 4, 2007
- French housing bubble set to burst - Telegraph.co.uk March 28, 2007
Article
states that France has tough lending rules that cap at 75%
loan-to-value. Even so, France's 210% housing appreciation since 1995
is higher than the comparable US rate of 190%, and France had a record
home building year in 2006. What's remarkable is although France and
the US housing markets seem to have parallel statistics, France
accomplished this without subprime products.
And France is sitting pretty. The ratio of household debt to disposable income in France is a modest 65%, compared with 115% in Spain, 146% in Britain, 171% in Holland, and 190% in Ireland.
AsiaAnd France is sitting pretty. The ratio of household debt to disposable income in France is a modest 65%, compared with 115% in Spain, 146% in Britain, 171% in Holland, and 190% in Ireland.
- Economist magazine posits an Asian housing bubble doesn't seem as pronounced as in the US, with the exception of India.
- Speaking of India, India should be ripe with housing bubble blogs... here's the only one I found - a well documented one no one seems to know about based on the lack of comments.
Technorati Tags: housing bubble, global housing, global property guide, cdo, subprime, india housing bubble
Interesting article. Thanks for the link to the Global Property Guide. Awesome resource.
Whether you're in Asia, Europe and The U.S one thing never changes-Human nature.
I witnessed first hand the Asian Financial Crisis. My father invested in a few homes between 1990-1998. Luckily, he went out at the right time, just before the Asian Economies went through a massive recession. But just the same, just before hitting the peak in the Philippine real estate, there was massive construction of new golf communities, high end condos etc. Even the biggest developers of our country didn't see(or maybe, did not heed) the heavily imbalanced supply & demand of real estate in the Philippines. Much like what is happening in our country right now.
Reply to this
I live in the UK and let me tell you, I'm counting the days until we get our property market crash. An average home here costs 11 times the average salary - it's impossible for anybody to buy a home unless they're willing to get into a lifetime of overwhelming debt. But of course, now the credit crunch is in full swing, that's going to be a little difficult. It's going to suck for a lot of people, but I'll be one happy monkey when our artificially pumped up property values come crashing down.
Reply to this