Wednesday, December 01, 2010

Interactive Chart of the Day: Global House Prices

From The Economist, a great interactive chart of global house prices, with options to adjust home prices for inflation and income, and compare to rents. Compared to the U.S. housing bubble, the bubble was much worse in countries like Australia and South Africa, and it doesn't matter whether or not you adjust for inflation or income levels.      

17 Comments:

At 12/01/2010 4:50 PM, Blogger juandos said...

Nice find!

Thanks for linking...

 
At 12/01/2010 5:29 PM, Blogger randian said...

Australia's big cities are all ringed by no-development zones AKA Smart Growth.

 
At 12/01/2010 6:57 PM, Blogger VangelV said...

I am confused. China is supposed to have a massive real estate bubble but if we look at the price movement from 2000 to today we see that its housing has gone up less than France, Spain, South Africa, Sweden, Australia, the UK, and New Zealand even though there is a massive urbanization movement in China that is not in evidence in those countries.

 
At 12/02/2010 5:59 AM, Blogger rjs said...

its all you need to know about ireland...

 
At 12/03/2010 5:57 AM, Blogger PeakTrader said...

We don't know if housing prices rose in these countries from easy financing and overbuilding or from tight financing and underbuilding.

Two major exporters, Germany and Japan, didn't have housing bubbles (China is basically a place countries offshore their factories).

Anyway, asset bubbles are unimportant, except how they influence economic growth. What's important is maintaining sustainable economic growth.

Without the housing bubble, the U.S. would've underproduced even more, throughout the 2000s, because of up to $800 billion a year trade deficits.

 
At 12/03/2010 8:06 AM, Blogger VangelV said...

Without the housing bubble, the U.S. would've underproduced even more, throughout the 2000s, because of up to $800 billion a year trade deficits.

No matter how it is spun creating asset bubbles is not a good thing because malinvestments are a drain on the real economy. The real problem with the US is the government's meddling in the economy and the Fed's monopoly over the money supply.

 
At 12/03/2010 9:23 AM, Blogger randian said...

Without the housing bubble, the U.S. would've underproduced even more, throughout the 2000s, because of up to $800 billion a year trade deficits.

Trade deficits are not a drag on economic growth, and in fact the US economy grows faster in years when trade deficits increase compared to years when trade deficits decline.

 
At 12/03/2010 10:55 AM, Blogger PeakTrader said...

VangelV, creating real assets to raise actual output towards potential output are not "malinvestments."

Randian, Y = C + I + G + NX. So, negative net exports (or trade deficits) subtract from domestic output.

The U.S. economy had the strength to expand in spite of negative net exports, and was the main engine of economic growth pulling the rest of the world's major economies.

 
At 12/03/2010 1:10 PM, Blogger PeakTrader said...

Also, I may add, the U.S. was able to consume more than produce (up to $800 billion annually), because of increasingly larger gains-in-trade from a virtuous cycle of consumption-investment, where export-led economies sold their goods too cheaply and lent their dollars too cheaply.

Over the 2002-07 bubble, the U.S. economy was most efficient, e.g. producing and capturing assets and goods with little effort in the global economy, until actual output fell below potential output.

 
At 12/03/2010 6:45 PM, Blogger randian said...

Randian, Y = C + I + G + NX. So, negative net exports (or trade deficits) subtract from domestic output.

Meaningless theory. As I said, GDP growth is positively correlated with trade deficits. Attempts to reduce trade deficits lower GDP. Impoverishing ourselves to become net exporters is stupid.

 
At 12/03/2010 8:12 PM, Blogger PeakTrader said...

Randian, it's not a "meaningless theory." It's an accounting identity that measures domestic output.

Are you saying if Germany began running trade deficits instead of trade surpluses, its domestic output would increase, ceteris paribus?

 
At 12/03/2010 10:10 PM, Blogger VangelV said...

VangelV, creating real assets to raise actual output towards potential output are not "malinvestments."

What does creating real assets have to do with what the US is doing? It is borrowing from China in order to pay for a war in Afghanistan, not exactly a wise thing to do. Consumers borrowed not to invest in productive capital but to buy depreciating consumer goods.

 
At 12/04/2010 2:43 AM, Blogger randian said...

Are you saying if Germany began running trade deficits instead of trade surpluses, its domestic output would increase, ceteris paribus?

No, I'm saying that when your GDP goes up, your trade surplus gets smaller (or deficit gets larger). I'm also saying that deliberate interference in the market to reduce the deficit (or increase the surplus) will lower your GDP. And by the way, "domestic output" != GDP.

 
At 12/04/2010 3:47 AM, Blogger PeakTrader said...

VangelV, whether you believe it's wise or not, it's the "world order."

Foreigners finance the U.S. military through currency exchange rates, interest rates, and inflation. So, the U.S. has been able to consume more than produce, and will continue to consume more than produce.

The U.S. not only leads the world, it leads the rest of the world combined (in both revenues and profits) in the Information and Biotech Revolutions. So, U.S. capital is productive.

Moreover, I stated before:

"If you look at U.S. household net wealth, since 1952, as a percentage of GDP, you'll see two peaks in 2000 and 2007, and two troughs in 2002 and 2009.

The peaks were substantially higher than the long-term average and the troughs were roughly equal to the long-term average.

So, even at the bottom of the asset bubbles, we were at the long-term average of net wealth (between 1952-95)."

Randian, exports represent a country's output and imports represent another country's output. So, an increase in exports increases domestic output (or GDP).

 
At 12/04/2010 4:18 AM, Blogger randian said...

So, an increase in exports increases domestic output (or GDP).

Only if everything else stays the same, which it won't. Mercantilism, which you espouse, is the road to poverty.

 
At 12/05/2010 9:38 AM, Blogger VangelV said...

VangelV, whether you believe it's wise or not, it's the "world order."

The big money is made by betting against the established understanding of the way things work at a time when instability shows up. The fact that the US has borrowed from China to make the ruling elite of Afghanistan rich does not mean that it will be able to do so for much longer.

Foreigners finance the U.S. military through currency exchange rates, interest rates, and inflation. So, the U.S. has been able to consume more than produce, and will continue to consume more than produce.

We don't make money by looking backwards but by looking at reality and making accurate bets about the future.

The U.S. not only leads the world, it leads the rest of the world combined (in both revenues and profits) in the Information and Biotech Revolutions. So, U.S. capital is productive.

But it does not matter. The information revolution is now a battle of commoditized production. Look at Cisco's share price for a decade and see what it means for the future at a time when foreign competition is getting stronger and stronger. Countries in other countries are doing biotech research also. And it is clear that biotech will not lead to many jobs for the unemployed masses and will not support the level of consumption going forward.

Randian....

???? You are confused and delusional. What does Randian mean and how does it apply to me?

 
At 12/05/2010 9:39 AM, Blogger VangelV said...

Only if everything else stays the same, which it won't. Mercantilism, which you espouse, is the road to poverty.

Yes it is. But our friend is still a few hundred years behind the times.

 

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