The Elusive Canadian Housing Bubble

[GRG55]

Re: The Elusive Canadian Housing Bubble

Housing prices in Singapore have been going up like crazy for more than the last 25 years, you have to go back to 1950s to see the scale of appreciation. Downtown land prices have risen from like $7-$10 psf in the 1950s to $10,000 psf today, a thousand fold.

Housing prices in Singapore have gone both up and down during different periods in that long time frame. The recent escalations, post-2009, have been both rapid and have set all time new record high nominal prices. This has come in spite of the Singapore government's very significant regulations (in the past 6 years) to dampen the property market, including restrictions on LTV for both first and multiple home owners, minimum cash down payments, and stamp duties on property purchases.

The present period is the second great bubble run up, the prior one being in the early 1990s, that busted dramatically about 1996.

[Milton Kuo]

Re: The Elusive Canadian Housing Bubble

The present period is the second great bubble run up, the prior one being in the early 1990s, that busted dramatically about 1996.

I've casually observed Hong Kong real estate since the mid 1990s and, while the prices seem bubblier than ever, the question remains, "Will prices ever correct to an extent that an average Hong Kong resident can afford a house?" I have the same question about Singapore, which incredibly high housing prices I've only relatively recently been aware.

Barring a war or some other catastrophic event, I just don't see housing prices in those places ever being affordable to a person who isn't worth at least one million USD. Hong Kong and Singapore are, to a more realistic sense, truly places where they aren't making any more land and the idea of "housing prices only go up (in the long term)" is an idea that is generations old.

[Polish_Silver]

Palace vs California

i remember when the grounds of the imperial palace in tokyo were estimated to be worth more than the entire state of california.

Duncan mentions that in the "dollar crisis" , but admits that it's hard to find a source or document to back it up.
Does anyone know of a source for this?

At any rate, real estate in Tokyo was massively overvalued, at least according to the market judgement of the last 25 years.

[jk]

Re: Palace vs California

Duncan mentions that in the "dollar crisis" , but admits that it's hard to find a source or document to back it up.
Does anyone know of a source for this?

At any rate, real estate in Tokyo was massively overvalued, at least according to the market judgement of the last 25 years.

this reference gives some numbers

https://web.archive.org/web/20140301...ns-lost-decade

[Milton Kuo]

Re: Palace vs California

Duncan mentions that in the "dollar crisis" , but admits that it's hard to find a source or document to back it up.
Does anyone know of a source for this?

I don't have a source but GMO has done internal research to verify the claim that the price of the land under the Japanese imperial palace was worth more than all of California. Jeremy Grantham once said in an interview (I forget which one) that GMO had actually done the research to verify that meme and found it to be true.

[Polish_Silver]

Re: Palace vs California

this reference gives some numbers

https://web.archive.org/web/20140301...ns-lost-decade

Good article and it does explain where the valuation comes from.

[santafe2]

Re: The Elusive Canadian Housing Bubble

August data in.

Let's start a little contest here looking for the most appropriate single word description for the anomalous Vancouver trend shown below.

I will nominate "nuts".

Already been coined: goinup. The scale of this bubble should be compared to Tokyo in 1988 or the NASDAQ in 1999. Prices might drop by more than half but not by 90%.

[GRG55]

Re: The Elusive Canadian Housing Bubble

Already been coined: goinup. The scale of this bubble should be compared to Tokyo in 1988 or the NASDAQ in 1999. Prices might drop by more than half but not by 90%.

I wonder sometimes. With the RoW re-flating like madmen, and the Fed almost certain to follow at some point, any correction could be comparatively shallow and short-lived.

[touchring]

Re: The Elusive Canadian Housing Bubble

I've casually observed Hong Kong real estate since the mid 1990s and, while the prices seem bubblier than ever, the question remains, "Will prices ever correct to an extent that an average Hong Kong resident can afford a house?" I have the same question about Singapore, which incredibly high housing prices I've only relatively recently been aware.

Barring a war or some other catastrophic event, I just don't see housing prices in those places ever being affordable to a person who isn't worth at least one million USD. Hong Kong and Singapore are, to a more realistic sense, truly places where they aren't making any more land and the idea of "housing prices only go up (in the long term)" is an idea that is generations old.

The situation in Singapore is more complicated than Hong Kong because the government owns most of the land, acquired from private hands in the 1960s/70s, and has built about 1 million public housing apartments (known as commieblocks in the West). These apartments are leased to citizens for 99 years for one third to half the cost of private owned real estate. The existence of such a large number of public housing also depresses the market price of private apartments.

As far as I'm aware, HK also has public housing but in smaller numbers.

[Polish_Silver]

Re: The Elusive Canadian Housing Bubble

I wonder sometimes. With the RoW re-flating like madmen, and the Fed almost certain to follow at some point, any correction could be comparatively shallow and short-lived.

It's hard to know. Manhattan took a big tumble in the early 1990's, and San Francisco area real estate is still quite a bit down from the 2005 peak.

If it's a "strictly vancouver" bubble, I don't think there will be a government reflation effort. Could you find a non-bubble city comparable to Vancouver and use that as the baseline?

[ProdigyofZen]

Re: The Elusive Canadian Housing Bubble

I wonder sometimes. With the RoW re-flating like madmen, and the Fed almost certain to follow at some point, any correction could be comparatively shallow and short-lived.

How is the RoW reflating like madmen? Yes, Japan and ECB are but the rest?

[GRG55]

Re: The Elusive Canadian Housing Bubble

How is the RoW reflating like madmen? Yes, Japan and ECB are but the rest?

Whether voluntary or not their falling currencies are inflationary.

[ProdigyofZen]

Re: The Elusive Canadian Housing Bubble

Whether voluntary or not their falling currencies are inflationary.

Yes I agree completely, but that is the absolute wrong type of inflation they want. It is CPI inflation not Asset Price Inflation.

[Polish_Silver]

Re: The Elusive Canadian Housing Bubble

Yes I agree completely, but that is the absolute wrong type of inflation they want. It is CPI inflation not Asset Price Inflation.

Right, CPI inflation would make houses less affordable,
until wages catch up.

[don]

Re: The Elusive Canadian Housing Bubble

John Sanford, one of the owners of Rocky Mountain Pawn on Macleod Trail, Calgary