Real Estate is Cooling All Across the Globe

NYT: Housing Woes in U.S. Spread Around Globe

In Ireland, Spain, Britain and elsewhere, housing markets that soared over the last decade are falling back to earth. Property analysts predict that some countries, like this one, will face an even more wrenching adjustment than that of the United States, including the possibility that the downturn could become a wholesale collapse.

Further east, in India and southern China, prices are no longer surging. With stock markets down sharply after reaching heady levels, people do not have as much cash to buy property. Sales of apartments in Hong Kong, a normally hyperactive market, have slowed recently, with prices for mass-market flats starting to drop.

Is a global real estate slow-down factored into equity markets?

This is the reason I’m avoiding the financial and consumer discretionary sectors — too much risk there and I don’t think it’s reflected in current prices.

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3 Responses to Real Estate is Cooling All Across the Globe

  1. Chris says:

    Just when I felt like we had hit bottom in this arena… Argh. The statistics on the Irish market on nytimes.com are truly frightening. It’s like the crisis is spreading East slowly and will soon take over all of Europe, Russia, India and the Far East.

  2. willrwright says:

    No need to panic.

    I think the risk is centered in the UK and Spain — the RE boom happened there for the same reasons as in the US: lots of leverage and speculation.

    Ordinary people in China, India and SE Asia have WAY less access to consumer credit than people in the US. As availability to credit improves (and it is rapidly), this will be good for real estate in these places. Furthermore, RE price increases there are supported by the fundamentals: economic growth.

    I wouldn’t go near it now, but I am LT bullish on RE in China, India & SE Asia.

  3. Steven says:

    I agree RE in China in the LT is going to be a bull market, especially when majority of Chinese are still slowly bringing their mattress money out and investing them in securities or even just depositing them in a bank. This goes back to what Will said about accessibility of credit.

    But in the ST, it seems that the housing boom in Asia, mainly HK, Shanghai, and Beijing has leveled off and might even fall. And that probably has alot to do with the fact that the major stock markets in those cities are down quite a bit, with some erasing most of the gains that were realized in 2007.

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