was published a few days ago the wonderful news that in the past year house prices in Spain had risen only 9%. It's great right? Only 9%.
Since then "sold" as good news but I'm wondering Where is the good news. It is certainly accustomed to the outrageous increases in the last 20 years (yes, 20!) 9% seems very good news. But from a social standpoint, the level of housing prices and the rate at which they are growing (well above inflation) is very worrying.
Anyway, no one is misleading. I do not know if we can call this housing bubble, but the worst thing that could happen is that burst and housing prices (and construction in general) came down.
At this stage of the game families have been mortgaged to historical limits and rates interest are rising, that is, mortgage fees are higher. Families will begin to have difficulty making ends meet and the financial institutions start recording the highest delinquency rates.
to a bank and does little grace having to attach a floor to collect the outstanding loan in case of default, but under grace if you will, having burst the housing bubble, the floor value is less than the amount seized outstanding mortgage and therefore can not recover 100% of what remains to be recovered.
If we ever get to this situation (hopefully not) a financial institution thereby restrigirían credit (credit crunch ) that the problem is not the price of housing, but funding. And not only produce for mortgage loans, but would affect all types of loans so that not only would this affect the housing market, but overall consumption would fall, affecting all sectors of the economy, causing general fall in prices, reducing production and therefore also of employment, which would take us even to a greater drop in consumption and so on. As falling prices would further the advancement of consumption over time lose value in the economic context, as consumers expect to consume goods were cheaper, which further aggravates the situation.
The solution to this spiral of deflation caused by a hypothetical outbreak of the housing bubble is really difficult. Although dependent on the Bank of Spain (which would have to see the European Central Bank's position in this case) lower interest rates would not stimulate consumption, since the problem is the price of money, but the availability of money in the market, as banks would be unwilling to take risks.
In fact, so difficult is the solution problem of deflation in Japan (formerly miracle economy) for more than 15 years because of this crisis, despite the 0.1% rates that have been implemented.
Ultimately, it is desirable that the housing prices continue to rise, although, preferably, in moderation, please.
Since then "sold" as good news but I'm wondering Where is the good news. It is certainly accustomed to the outrageous increases in the last 20 years (yes, 20!) 9% seems very good news. But from a social standpoint, the level of housing prices and the rate at which they are growing (well above inflation) is very worrying.
Anyway, no one is misleading. I do not know if we can call this housing bubble, but the worst thing that could happen is that burst and housing prices (and construction in general) came down.
At this stage of the game families have been mortgaged to historical limits and rates interest are rising, that is, mortgage fees are higher. Families will begin to have difficulty making ends meet and the financial institutions start recording the highest delinquency rates.
to a bank and does little grace having to attach a floor to collect the outstanding loan in case of default, but under grace if you will, having burst the housing bubble, the floor value is less than the amount seized outstanding mortgage and therefore can not recover 100% of what remains to be recovered.
If we ever get to this situation (hopefully not) a financial institution thereby restrigirían credit (credit crunch ) that the problem is not the price of housing, but funding. And not only produce for mortgage loans, but would affect all types of loans so that not only would this affect the housing market, but overall consumption would fall, affecting all sectors of the economy, causing general fall in prices, reducing production and therefore also of employment, which would take us even to a greater drop in consumption and so on. As falling prices would further the advancement of consumption over time lose value in the economic context, as consumers expect to consume goods were cheaper, which further aggravates the situation.
The solution to this spiral of deflation caused by a hypothetical outbreak of the housing bubble is really difficult. Although dependent on the Bank of Spain (which would have to see the European Central Bank's position in this case) lower interest rates would not stimulate consumption, since the problem is the price of money, but the availability of money in the market, as banks would be unwilling to take risks.
In fact, so difficult is the solution problem of deflation in Japan (formerly miracle economy) for more than 15 years because of this crisis, despite the 0.1% rates that have been implemented.
Ultimately, it is desirable that the housing prices continue to rise, although, preferably, in moderation, please.
