Property bubbles: Four countries, the same script

"Bricks and mortar never go down." This has been said in many countries. Just before prices went down.

Four bubbles, four countries. And each time, almost the same script.

Japan, late eighties. Credit flows freely, and Tokyo land prices soar.

A famous estimate of the time: the land of the Imperial Palace in Tokyo was worth more than all of California.

A park in the middle of a city, dearer than an entire American state. At the time, few people found it absurd.

The Tokyo stock market peaked in late nineteen eighty-nine. Then land prices fell for more than ten years.

Spain, the two thousands. Credit is cheap, and the country builds like never before.

Around two thousand six, it started more homes than France and Germany combined. For a country with a third of the population.

When the crisis of two thousand eight arrived, new homes were left without buyers. And loans without repayment.

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In two thousand twelve, Europe agreed to lend up to one hundred billion euros to rescue Spanish banks.

Ireland, same period. Banks lend without limit, developers build entire estates.

After two thousand eight, many stayed empty or unfinished. The Irish call them ghost estates.

Home prices lost about half their value. In two thousand ten, the state had to ask Europe and the IMF for help.

China, two thousand twenty-one. The developer Evergrande can no longer pay its debts.

More than three hundred billion dollars of liabilities. And buyers who paid for flats that were never delivered.

In two thousand twenty-four, a Hong Kong court ordered its liquidation.

Four countries, four eras. Now look at what they have in common.

First, easy credit. When borrowing is simple and cheap, prices rise with what people can borrow.

Next, too much is built, or too late. The homes arrive just as the buyers leave.

Finally, a belief: property cannot go down. It reassures everyone, right up to the last buyer.

A property bubble deflates slowly. Not in a day as on the stock market, but over years.

And since it is bought on credit, the debt does not fall with the price.

Remember the phrase from the start. When everyone repeats it, that is the time to be careful.