C.H.I.N.A.: 'Cheap House Is Not Allowed'

The housing crisis of 2008 can trace its origins back to the stock market trends of the mid- to late 90 's. During a period of extended growth in the stock market, increased individual wealth among investors led to generalized increases in spending, including in the housing market. With more disposable income in the pockets of consumers, the demand for housing increased in the late 90 's. Due to the fact that homes are large projects and their construction takes a large amount of time, the supply of homes in the market is inelastic on the short term. Because of the fixed supply of homes, as per the law of supply, which

With the consistent increase of property prices and more personal debt than ever before, we assume that there’s a housing bubble in Australia. The statistics show that from 2008 till now, property prices have been going up as a result of increased mortgage debt. When it slows down, that could cause a property crash. We are sure that there’s a housing bubble, but we cannot confirm when it will finally burst although a few area in Australia has already met a decrease of house prices. There are 3 indicators of the housing bubble in Australia.

Macroeconomics is an excellent tool for the analysis of the housing industry as something like a capital good, as a home is considered to be, cannot easily be studied in a short-term platform. Real estate is a good that costs several times more than an average persons annual income, in the United States that number is typically 7 times as much, and in the United Kingdom that number is 14 times as much. Several factors of both supply and demand directly impact the housing market on a macroeconomic scale. (Business Economics, 1)

In recent years, what can only be described as extremely rapid growth has occurred in the London property market. With a present average house price of £458,283 compared to £179,492 for the rest of England and Wales (Land Registry, 2015, pp. 3-5), London is an interesting case study for analysis due to a consistent 9.8% ten year growth average (Knight Frank , 2014). Something demonstrated in Figure 1, which shows property price percentage increase from the twelve months prior to December 2014. With such levels of growth, it is easy to conceptualise London’s attractiveness to investors, particularly that of foreign origin from less stable countries.

It seems hard to believe that over ten years have elapsed since the peak of the US housing market in the previous economic expansion. Residential construction as a percentage of real GDP reached a zenith of 6.2% in 2005 Q3. The ensuing contraction saw this share decline -60% to trough at 2.5% of GDP in 2010 Q3. The current economic expansion began in 2009 Q3, but the sheer magnitude of the collapse made it virtually impossible for any subsequent housing recovery to impart the same outsized contributions to headline GDP growth compared to the previous cycle. This has consequently played a significant role in restricting the ability of the economy to shift into a higher gear of growth during the current

6.3 TRILLION DOLLARS! This is how much the value of homes have fallen in the United States since its real estate peak back in July of 2006. After the price of houses peaked in 2006, they gradually started to decline until December 30th, 2008. This is when the Case-Shiller home price index which measured the value of homes, reported its largest price decrease in its entire history. From there we saw prices continue to decline until we hit all-time lows in 2012. The United States housing bubble burst will be talked about for years to come including many what caused it and how to prevent such occurrences in the future. Low interest rates, Housing bubble, subprime mortgages, as well as securitization all contributed to the housing market crash of 2008 and will all be explained in this paper. According to the general consensus, most people believe that the housing bubble was the main cause of the 2007-2009 economic recession in the United States of America.

a growing flow of capital into real estate in an era of low interest rates and the widespread

Prior to the crisis, investments in the residential space saw a significant shift around 2002. Prior to that, residential investments over almost a 30-year period was estimated between 4 and 5 percent of the nominal gross domestic product. In only a short period of time from 2002 to 2005, housing prices exploded, housing prices skyrocketed, with the peak prices showing an increase of over 12% per year. (Dokko et al. , 2009)

The first perspective that we will look at is the timing of the housing boom. During this time residential investment moved above the average range and rose substantially towards the end of the year (Dokko, J., Boyle, B., Kiley, M. T., Kim, J., Sherlund, S., Sim, J., & Van den Heuvel, S, 2009). During

Today, owning huge personal investments such as a house is one of the most rewarding things for people these days, which is a part of the American dream. The sudden decrease in mortgages rates in 2001 allowed more people to purchase a house, and achieve one of their biggest dreams (Glaeser, 2010). The increase in the demand for homes caused the homebuilders to come up with many housing projects, ever in the history of America. Given the trend of the housing demand, it is already unavoidable for the prices of both lot and houses to increase. This is consistent with the price elasticity in the supply of houses, resulting to the home industry to be elastic. Since houses built are considered as ‘manufactured goods’, the housing industry can easily become elastic depending on the demand from the

This research topic is significant to the current property market in Singapore and its sudden increased demand for houses despite the economic downturn, exploring deeper as to whether the government policies were the real influential causes to this boom in property demand. It has relevance to the economic concepts of demand and supply, elasticity, inflation and monopolistic competition. This topic is worthy of investigation because it is a hot media topic in Singapore, and is widely debated in the country because it’s the most expensive household asset.[2]

The most populous country in the world is constructing houses, districts, and cities with no one in them. Ghost cities is probably the wrong word to describe these unoccupied cities. Since Ghost cities/towns typically mean people have completely abandon the city/town. These cities have yet to be lived in. Many people in the financial world are nervously looking at China. They are building 12-24 new cities each year. The concept they have is to build now and sell later. The assumption is if you built it they come, but no one is coming. Other city housing markets follow the supply and demand rule, but in China the prices stay high. Kenneth Rapoza (2015) stated in the Forbes article, “Anyone can build a useless overpass, but it takes China to build a city for a million people with no buyers in sight.”

The soaring property prices in China’s coastline and major cities such as Beijing, Shanghai, Shenzhen, and Dalian has formed the biggest bubbles in the real estate market in the decade. However, we do not see any slowdown in these cities. As of today, the property prices seem to keep on growing forever. Will China’s housing bubble pop?

China is one of the major economical players in today’s international market. China’s economy is the “seconds largest in the world after the United States” (Joseph, 63). This is a striking achievement due to fact that China is a “developing country”. China has achieved a great amount of success through the collaboration of political and economical regimes. The economical growth in China led to “one of the biggest improvements in human welfare anywhere at anytime” (Kristof, 15). Currently, China is experiencing a real-estate bubble. This eventually will hit a climax, disrupting the real-estate market within China. This real estate bubble that China is undergoing is considered one of the "biggest housing

Just a couple weeks ago, many cities in China have begun to loosen the restriction. In China, 2010, Chinese central government issued a housing restriction policy, which limited families’ purchase of housing and commercial loans for the real estate companies. It supposed to control the demand of the real estate, and lower the housing price. However, after following this policy for 4 years. The housing price still keeps growing. Many small real estate companies were heavily effect by this policy. Some of them had exited this market. However, the financial statements from several big real estate companies in China indicated that these companies were making more profit and experiencing