The house-price boom preceding the financial crisis had
far-reaching effects and prices only seemed capable of climbing. However recent reports do give a brightening
outlook of hope to America while the darkening of the euro area economics
continues. All over the globe house
prices seem to be rising and falling in equal numbers (Spain prices have
dropped 9. 3% while Canada has seen an increase of 3.3%). The method to gauge a house’s value,
determining whether homes are expensive or cheap is completed using two
measures. The first gauge is
price-to-rents ratio, being analogous to price-earnings ratio used for
equities, with the rents going to property investors. The second measure, the
ratio of prices to disposable income per person, illustrates a 35%
overvaluation in France to a 36% undervaluation in Japan.
Very interesting article that sheds some light on the housing situation not only in the United States, but the world as a whole. However, it is very interesting that the author of this article chose to keep the United States and China as a whole in their analysis, but opted to break Europe apart into separate countries. I understand that the graph is going by country, but the urban areas of the U.S. and China could account for a European country by themselves and the variance between the urban area and rural is too much to ignore. The author should have split his table into 3 continents and done his analysis from there.
ReplyDeleteAlso, this analysis seems to not have accounted population growth in their analysis. I understand house prices have been inflated, but the author chose not to include population growth, which would drive housing prices up. Therefore, housing prices may be inflated, but not nearly enough as this author claims them to be.