The fear of a new world real estate bubble returns

La posible quiebra del gigante chino Evergrande, la promotora más endeudada del mundo, es solo el canario en la mina que avisa de los riesgos que acorralan al negocio inmobiliario. El mercado de la vivienda se calienta —o recalienta— y en algunos países del globo hay riesgo de nuevas burbujas inmobiliarias.

The suffocating rise in the price of houses - not thus of citizens' salaries - has pushed some countries to walk on the tightrope.Housing prices in OECD countries have increased 9.5% from the first quarter of 2020 to the same period of 2021, its highest rate in 30 years.In the European Union as a whole, the price registered from January to March an year -on -year rise of 6.1%, which represents the greatest increase since 2007.

Pandemia has been the perfect storm.The wide liquidity due to fiscal and monetary stimuli never seen before they have been able to keep the global economy standing, the huge savings accumulated by families since the beginning of the pandemic, the low interest rates that favor indebtedness and expectationsFrom a solid recovery in the economy they are contributing to heat the engines of some real estate markets.Not forgetting the shortage of supply, because the construction of houses around the world is anemic - for the lack of labor and materials and the rise in construction costs—.

New Zealand, Canada and Sweden are the real estate markets with a higher risk of bubble, according to Bloomberg indicators, in whose analysis it says to have detected alarm signs of an intensity not seen since the beginning of the financial crisis of 2008.Norway, the United Kingdom, Denmark and the United States also launch worrying signs.They are followed by Belgium, Austria, France ... This is the situation in some of the main real estate markets.

New cycle in Spain

Spain occupies the 17th position on that list.Free of danger, for the moment, but not of scares.The country has left pandemic and channels recovery with an overflowing joy that is being reflected in the rise in prices and sale.The housing market has started a new cycle that, in general, is not alarming, but that requires not losing sight of certain indicators.The price rose 3.3% in the second quarter of 2021, its largest rise since the end of 2019.The new houses fired 6% at the year -on -year rate.It is true that it compares with an atypical period, in which the pandemic marked the step and decisions, so it will be necessary to be attentive to whether the trend continues in the coming months.What is clear is that in 2021 more increases are expected in the price of housing in Spain.According to Bankinter, it will be 4%.

And if prices go up, transactions are no less.Sales between January and July already exceed those of the same period of 2019.Only 50 were closed in July.258 sale, 53.5% more interannual.It is the highest figure since 2008, according to the INE.That same month 35 were signed.329 mortgages, returning to 2011 levels.

Young Spaniards cannot access a home, so these purchases are for replacement (improving the existing) and as an investment because after the pandemic he has regained a strong impulse the brick as a refuge value."Costa and Periferias from large cities concentrate the demands of investors," says Julio Rodríguez, former president of the Mortgage Bank of Spain and member of economists in front of the crisis.And we must not forget that investors feed on the expectations of higher prices.These are individuals with savings - the Bank of Spain figure the forced savings of families at 2.5% of GDP - who buy house for their rental.They do not care that profitability has dropped and is placed by 3.7% (in the second quarter) because there is no investment product that resembles.Only in July almost 15 were paid.000 houses in cash, without mortgage.

José García Montalvo, economist and professor at Pompeu Fabra University, detects in its analysis the return of private investors, after the withdrawal in the hard months of the pandemic."In the first semester, 20.6% of the total purchases have meant," he explains, while saying not to see bubble signs, although "that does not mean that tomorrow we are not like the US".The purchase as an investment will remain firm because, for now, “the alternatives are much less attractive than housing,” considers José Luis Suárez, a professor of the IESE.

This is the panorama that draw the data.And with them in hand, the OECD agency says: “We do not currently see a risk of bubble or generalized overheating in the Spanish real estate market, although the evidence points to a gradual increase in housing prices for 2021.It does not seem alarming in the context of an economy that recovers from the pandemic, ”says Luiz de Mello, director of Economic Policy Studies of the OECD.

The argument of the analysts carefree by an upcoming bubble is that prices are around 20% below the 2007 maximums."The price is rising slightly above inflation and the absolute level is below the historical maximums," insists Suárez.In addition, house production levels do not seem to scandalize.“This year we will reach 500.000 housing sale, about 90.000 in new work.They are very reasonable, ”believes Juan Moreno, Bankinter analyst.From the employer they insist on that idea: “We have some needs of about 130.000 new homes per year, so there is less than what is demanded, ”says Daniel Cuervo, general secretary of Apcespaña.And he adds: "both individuals and companies are less indebted thanks to the risk policy of financial entities".

But the tsunamis take a few minutes to reach the shore and some analysts have rushed to warn the risk of market overheating.For Carlos Martín Urriza, director of the Economic Cabinet of CC OO, “the growing loss of housing for purchase or rent, whose growth is much higher than home income, is eroding its purchasing power and payment capacity.When the cost of a good like housing is decoupling from the population's ability to pay the bubble, it becomes inevitable ”.

Julio Rodríguez believes that Spain is far from the 2007 levels and that the revenues of much of the population do not give to primTo repeat fiascos.Taking the data of the Bank of Spain, “the volume of the new loans increased by 60% in the first semester of 2021.The living balance first recorded in many years a positive year -on -year variation rate of 0.5% in June, ”he says.Rodriguez is concerned about what is happening with the new work on the coasts: "In 2020, in full pandemic, new -construction homes in tourist areas put on sale almost removed them from the hands to the promoters," he says.He quotes the case of Granada, a destination that knows very well.In this regard, the employer of the builders and promoters of Spain says that "the projects are not being executed in locations with market problems".

The Association of Banks Users, Savings and Insurance Boxes (ADICAE) has detected reheating in the real estate market.It is concerned that in the last eight years the average amount of mortgage loans for housing acquisition has increased by 27.8%."We are concerned about the great apparently competitive mortgage offer, that people are trapped with mortgages that have rigged linked products and that there is an easy financing rise," argues Manuel Pardos, president of Adicae.

Credit is one of the most dangerous indicators and, although the mortgage activity is showing great dynamism, it does not seem serious."It is not at the cost of neglecting risk analysis policies, which starts from requirements such as financing less than 80%, financial fee of a third of available net income, financing directed towards a solvent profile with stable income ...", says LeyreLópez, analyst at the Spanish Mortgage Association (AHE).According to the Bank of Spain, the percentage of mortgages with financing greater than 80% is only 8.9%.Daniel Cuervo adds that "the buyers' effort rate does not exceed 7.5 years, so we are not in a worrying situation [greater than 9 years]".In short, the OECD International Agency is clear: “Banks are being relatively prudent with their loans.Compared to 2007, central banks have a series of macroprudential tools that can use if the risks will increase, ”.

USA

María Antonia Sánchez-Vallejo, New York

In the first world economy, the real estate bum sneaked into pandemic.The rise of house sales in April 2020 surprised many economists, since, like other sectors of economic activity, a generalized closure was expected.But in full onslaught of the virus, sales shot themselves as buyers with sufficient savings took the opportunity of historically low mortgage interest rates.In 2020, sales of built houses reached their highest level in 14 years, practically from the 2007 crisis.

High demand and the shortage of supply caused an escalation in the price of the homes that continue today.According to the Case-Shiller index, the average price in the country rose 18.6% year-on-year this last June, which meant the greatest price increase in the last three decades.This index registered an increase in the 20 largest cities and up to nine cities prices rose more than 20%.Phoenix (Arizona), San Diego (California) and Seattle (Washington) led the increases with 29.3%, 27.1%and 25%, respectively.

The market has heated.To this have also contributed the monetary policies of the FED, with interest rates anchored in 0% and the purchase of assets to reduce long -term interest rates.A report from the New York Federal Reserve found that at the end of 2020 the highest volume of the history of mortgages had been given to families with a higher solvency than before the 2008 crisis of 2008.A substantial difference with respect to the systemic crisis of the time.

Very few in the United States saw the real estate crash from 15 years ago.The generous free mortgage bar at low price, which turned out to be toxic, and the unwavering faith of the American in private property had fired the value of the house at record rates one year after another.Until the bubble punctuated, sitting a precedent dramatic that today many interviews in the reheating of the real estate market, even during the pandemic.

Thus, a conjunction of factors - the price increase, a scarce real estate park and a accused delay in the construction of new homes, as a result of the slowdown of 2020 - has investors and experts about notice, to whom they areHe raises a very relevant question: Is the US on the edge of a new crash?Or, on the contrary, are there reasons to talk about Bum, with all its positive implications?There are more those who predict a batacazo, if not as seismic as 2008, at least at least sound.While most experts ensure that the current BUM is unsustainable in the long term, the risk of implosion is, however, less thanks to what has been learned in 2008.

First, the Congress and federal regulators made significant adjustments in the mortgage granting requirements, with more precise standards.Second, the panorama of the mortgage executions is not as dramatic as then, thanks to the aid of the rescue plans of the administration, first with Trump and then with Biden.And, thirdly, analysts expect a moderation of demand for the rise in the price of mortgages, which this spring was at maximum since June.

Docks in the United Kingdom

Rafa de Miguel, London

The United Kingdom has accumulated such a number of black swans at its exit from the pandemic (unexpected events described by the Nassim Taleb statisticA new real estate bubble.The rise in the price of housing throughout the country, however, responds to very special characteristics that make it different from the one that ended up causing the 2008 crisis.The energetic response of the Boris Johnson government to alleviate the economic effects of forced confinement has caused the purchase of housing to be triggered.Buyers have sought, above all, large houses on the outskirts of cities, with more interior and exterior space.The response to a teleworking future."Prices have risen in general terms, but the promotion has been very relevant in the areas of the United Kingdom with less density," said economists Lindsay Judge and Cara Pacitti in their report for the Resolution Foundation Thought Center.The rise in the areas of lower density has been 6% in 2020 and 10% at a general level.But there is more, because London has maintained its irresistible capacity for attraction for investors, both domestic and foreigners throughout the year of confinement.

High income families have preserved their purchasing power, thanks in large part to the Job Retention Scheme (Employment Retention Plan) of the conservative government, very similar to Spanish ERTE, but notably more generous.That, together with the wide grants thoroughly lost to small and medium enterprises so that they did not go to Pique, has made many families have been able to maintain their income level and, therefore, of consumption.To this is added that, with the enormous capacity for savings, the temptation to improve housing has been very strong.Also helped by minimum interest rates and by the added gift of the Johnson Executive, which has forgiven until June 2021 the patrimonial transmissions tax (Stamp Duty, as is known in the United Kingdom).

The demand for single -family housing, un that.“A larger house in a central location not only offers more space to work, but also helps avoid the subway or buses.It allows bike or walking to the office if necessary (...).But it is important to note that the total number of single -family houses in the center is small and buy them, above all, those that are extremely rich, ”says Paul Cheshire, of the London School of Economics.

One of the most important decisions Johnson has taken in his recent government remodel.For decades, since Margaret Thatcher turned the United Kingdom into a country of owners by selling social protection homes that lived, especially in London, the country has an important housing crisis.Prices rise and go up, especially in big cities, and no politic.But at the same time, the young voter sees more and more like an impossible dream.The objective, according to experts, would be to build about 300.000 homes annually at an affordable price.The challenge, not achieved so far by any government, consists in encouraging that construction without contributing to too much a bubble that is always on the horizon.

The problem is Paris

Marc Bassets, Paris

Houses without braking is also a problem in France.The price has increased by 150% in the country since 2000, and 289% in Paris, according to OECD data cited by the weekly L’Ab obs.The same data indicates that to buy a 100 -square -meter residence, a family needs to spend the equivalent of 12.8 years of income.In France, a million annual transactions are made around a million transactions;30 years ago they were just over half a million.

Pandemia has not stopped climbing.Low interest rates, new construction housing and congestion of large cities have fattened prices: there is little supply and a lot of demand.In cities like Paris, high -purchasing power customers around the world make the square meter scan and scare away the middle classes.The French capital loses about 11 every year.000 inhabitants for this and other reasons, such as the decline in birth.

Pandemia has accelerated the tendency of some Parisians to leave the capital, frightened by the prices shot registered since the beginning of the century."We were on a bad way," summarizes, in reference to the great French metropolis, Henry Buzy-Cazaux, president of the Real Estate Services Management Institute."The situation," he adds in a telephone interview, "he was sickly, it was not normal".

There are economic reasons to look for housing outside Paris.Buzy-Cazaux cites the case of Orleans.In this city, the price of the square meter is almost four times lower than that of Paris, where the average exceeds 10.000 euros.There are jobs also: the extension of teleworking facilitates living in small cities.A survey of the IFOP Institute, published before the pandemic, indicated that 57% already wanted to leave the big city to "live closer to nature".The exodus, difficult to quantify, began before, but the coronavirus and the successive confinements have accelerated it.

France had long been on the path of a bubble, says Buzy-Cazaux, but has two "walls" that can attenuate it.The first, says the expert, are credit restrictions, in force since summer, which imposes the High Council of Financial Stability (HCSF).Measures include limiting credits to a maximum of 25 years and that the monthly credit payment does not involve more than 35% of buyer's income.The second "wall" is the obligation to modernize old buildings to comply with environmental standards, which will involve enormous expenses for buyers and can endorse the purchase.In addition, France has a public aid system and a broad social housing park that they have avoided in recent decades Catastrophes real estaters such as those of the United States or Spain during the financial crisis of 2008.

In Paris, according to a report by the Chamber of Notaries, “prices have paused for a year and oscillated in a fork between 10.600 and 10.800 euros [per square meter] ".Today is in medium cities where prices shoot, although they start from a much lower level than the capital.In Orleans (2.678 euros a square meter) increased 10.2% per year in the second quarter of 2021;In Dijon (2.857 euros), 11.4%;In Angers, 18.2% (3.433 euros), according to Le Monde data.These are cities of similar dimensions - between 115.00 and 150.000 inhabitants— and at a distance by high -speed train between the hour and average hour of Paris.The market is rebalancing.