For many years, my speech and my analysis are constant: real estate prices, we are in a bubble and the trend is inevitably to falling property prices.
Since 2008 I maintain the same thinking, it is clear that the decline in property prices that we consider as the beginning never materialized.
The question then many people ask themselves today is about the relevance of our analysis. We must recognize the error of analysis and abandon the idea of the significant decline in property prices? And if prices increased again after a consolidation cycle of 8 years (duration of average cycle of real estate)?
The important thing is not to be right or wrong. The important thing is being able to adapt one’s discourse and analysis according to the changing economic environment. So I am proud of all the analysis that I proposed for years on property prices. My fundamental analysis does not change, however, the conclusion tends to evolve gradually in recent months: The big drop in property prices probably never happen! Prices could even rise again under certain conditions,
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I apologize to those of you who scrupulously followed my analysis because I increasingly feel an error of assessment at the time or this massive fall in house prices was happening.
The settlement of the 2008 crisis takes a turn that we could hardly anticipate that in 2009 – 2016. We are now entering a new era that fundamentally changes the analysis and investment strategies, the era of negative interest rates and the era of “eternal low rates” at least for a period that could be very long.
We’re in the post economic crisis of 2008. Nothing goes well though, We are still on the brink of the same crisis. Monetary policy is still conventional and quantitative easing, ie monetizing the debt of states by the asset repurchase central banks are just beginning.
At the time, considering that monetary policy is inflationary: By increasing the amount of money in circulation, the price of goods and services must increase. Thus, in anticipation of the next inflationary period that has to happen, I am sharing my cautious about investing in real estate.
Next time, I write the next evolution of our investments should comply with these guidelines:
– Lower prices due to rising interest rates;
– Increase in rents over a return of inflation;
– And or (Lower lease renewal rents due to the economic crisis and the glut of rental supply in some regions.)
The volume and transactions are accompanied with a very low level of interest rates. Since the rates will resume their normal levels, prices will drop significantly.