What is Property Bubble?

Property bubble or the real estate bubble or the so-called housing bubble for the residential markets: It is the type of economic bubble that occurs periodically in the global and local real estate markets. Where real estate prices increase periodically and continuously.

Bubbles in the housing market are more important than stock market bubbles.

On average, stock price declines occur every 13 years and last for two and a half years, resulting in a loss of about 4% in gross domestic product. While housing price declines are less frequent, they are long-lasting and may lead to production losses that are greater than their double.

Identify and Prevent Property Bubble

There is always disagreement about whether it is possible to identify or predict a property bubble and then prevent it. As speculation bubbles represent a continuous, systematic, and increasing deviation of actual prices from their basic values. It is often difficult to identify bubbles even after they have occurred, due to the difficulty of accurately estimating intrinsic values.

There is always disagreement about whether it is possible to identify or predict a property bubble and then prevent it. As speculation bubbles represent a continuous, systematic, and increasing deviation of actual prices from their basic values. It is often difficult to identify bubbles even after they have occurred, due to the difficulty of accurately estimating intrinsic values.

When real estate prices rise, an increasing increase in demand increases, so speculation begins, demand increases, and at some point the demand decreases or stabilizes while supply is still increasing, causing a sudden and sharp decline in prices, and the bursting of the real estate bubble. This is how the real estate bubble happens.

Reasons for Property Bubble Bursting

Real estate bubble bursts when the lack or stop of demand in the real estate market collides with the increasing supply of real estate in the market. Prices may reach a stage at which people cannot buy, where demand stops, prices suddenly drop, and the bubble bursts.

Why are real estate prices increasing?

Real estate prices increase based on supply and demand, as when the demand for real estate increases, the prices increase. This is the first way to increase real estate prices. The second is that the supply decreases as the number of properties offered for sale or rent decreases.

Real estate prices in the market may increase from their real value without a bubble, if the supply increases in a measured manner and in proportion to the demand for real estate, and this will prevent a sudden drop in prices.

Recent Property bubbles

  • Australian property Bubble – Currently On
  • Baltic states housing bubble
  • British property bubble
  • Bulgarian property bubble
  • Canadian Property Bubble
  • China Real Estate Bubble – 2005-2011
  • Danish Real Estate Bubble – 2001-2006
  • Indian Real Estate Bubble
  • Irish Real Estate Bubble – 1999-2006
  • Japan Asset Price Bubble – 1986-1991
  • Lebanese Real Estate Bubble
  • New Zealand property – currently on
  • Polish Real Estate Bubble – 2002-2008
  • Roman Real Estate Bubble
  • Spain’s Real Estate Bubble 1985-2008
  • US Housing Bubble – 1997-2006