Chapter 34 Chapter 1 Real Estate Chronicles of Nations: A Century of Rise and Fall

Looking at the ups and downs of real estate markets in countries around the world over the past century, I really followed the saying - "Watch tall buildings rise, and buildings fall." The dizzying bubbles are inflated again and again, bursting again and again; wealth explodes again and again, and disappears again and again. "There is nothing new under the sun, what happened will happen again." After the end of World War I, the U.S. economy enjoyed unprecedented prosperity, which led to the development of the real estate industry.And Florida, located at the southeastern tip of the United States, enjoys a unique geographical location and a pleasant climate, and has become a holiday destination for Americans. A huge and far-reaching real estate bubble formed here.

At that time, compared with other places in the United States, Florida's land price was like a depression, and speculative capital gathered in this low-lying area from all directions. In 1925, Miami had more than 2,000 real estate companies and 25,000 real estate brokers, and the city's total population was only 75,000, and one out of three people was engaged in real estate transactions. From 1923 to 1926, Florida's land prices soared. Taking a piece of land on Palm Beach as an example, it was $800,000 in 1923, $1.5 million in 1924, and $4 million in 1925.Fantastic wealth stimulated everyone's nerves, and even the always cautious bankers were overheated and involved in the wave of land speculation.

In 1926, the real estate bubble burst, and many people went crazy and committed suicide, turning from rich to beggars.The bursting of the real estate bubble intensified the economic crisis, leading to the collapse of the stock market, followed by the nightmare of the "Great Depression" in the 1930s and the economic crisis that spread to the whole world. After World War II, the U.S. population exploded, commonly known as the "baby boom."When these babies grow up, they need a lot of housing, which has spawned a new round of real estate boom. From 1967 to 1972, the housing market in the United States was highly prosperous, and people frantically bought apartments.But the good times didn't last long. In 1975, the real estate market declined again, causing the most serious financial crisis after the "Great Depression".

Since 1982, due to the stimulating effect of the US government's taxation and fiscal policies, the real estate market has heated up again. In 1986, the government introduced a new tax amendment bill, and the real estate boom entered a climax, but in 1990, the real estate market fell into a trough again.After lingering in the trough for several years, starting from 1995, the US real estate market began to recover and entered a boom stage that lasted for 10 years.By 2006, the average price of real estate in the United States continued to decline. In 2007, real estate prices fell across the board, triggering the subprime mortgage crisis.

In September 1985, the finance ministers of the United States, the Federal Republic of Germany, Japan, France, and the United Kingdom signed the "Plaza Accord", agreeing to depreciate the US dollar and appreciate the yen.Subsequently, a large amount of international hot money entered Japan, hoping to take advantage of the appreciation of the yen to arbitrage in the foreign exchange market.Japan's real estate market absorbed a considerable part of hot money, which stimulated the rise in housing prices. In the late 1980s, due to the decline in exports due to the appreciation of the yen, the Central Bank of Japan adopted a very loose financial policy in order to stimulate economic development. A large amount of funds flowed into the real estate and stock markets. And the transfer of the stock market fueled the real estate boom.The Japanese found that it was faster to make money by speculating in stocks and real estate, so they took out their savings for speculation.

From 1986 to 1989, housing prices in Japan tripled.The average wage earner cannot afford to buy a house in a big city even if they spend their life savings. Only the billionaires and executives of very few big companies can afford a house.By 1989, real estate prices in Japan had soared to ridiculous levels.At that time, Japan, whose land area was equivalent to the state of California in the United States, had a total market value of land value equivalent to four times that of the entire United States.By 1990, the land price in Tokyo alone was equivalent to the total land price in the United States.

After 1991, as international hot money left the market with profits, the real estate bubble burst and real estate prices plummeted.By 1993, the Japanese real estate market had completely collapsed, leaving as much as $600 billion in bad debts.The Japanese economy has entered a long period of recession, and has not yet fully emerged from the shadow of the bubble economy. The real estate boom in Hong Kong began in the 1970s.By 1981, Hong Kong had become the region with the highest housing prices in the world after Japan. From 1984 to 1997, the average annual growth rate of housing prices in Hong Kong exceeded 20%, and housing prices in central areas such as Central and Tsim Sha Tsui reached more than 100,000 Hong Kong dollars per square meter.Real estate speculation is prevalent. In 1996, Hong Kong had to spend 1.5 million Hong Kong dollars to buy an account before buying a house.

The financial crisis in Southeast Asia punctured Hong Kong's real estate bubble, and property prices fell sharply. For example, in the famous middle-class community-"Tai Koo Shing", property prices fell from a peak of 13,000 Hong Kong dollars per square foot to 4,000 to 5,000 yuan per square foot.In just five years from 1997 to 2002, the total market value of Hong Kong's real estate and stock markets lost about 8 trillion Hong Kong dollars, which was more than Hong Kong's GDP in the same period.On average, each property owner in Hong Kong lost 2.67 million Hong Kong dollars, and more than 100,000 people changed from millionaires to millionaires overnight.The bursting of the real estate bubble caused Hong Kong's economic recession, which lasted for many years.

From the hosting of the Olympic Games in 1988 to the outbreak of the Southeast Asian financial crisis in 1997, housing prices in Seoul, South Korea, had risen for 10 consecutive years without falling, and had doubled several times.However, after the outbreak of the financial crisis, housing prices plummeted by 45%, causing heavy damage to the Korean economy.Entering the 21st century, South Korea's real estate is heating up again. On July 1, 2005, the South Korean government released data: In the five and a half years from January 2000 to June 2005, the average selling price of some apartments in Seoul soared from the original 377 million won to 1.065 billion won. Reached 2.8 times.Of the 27,000 apartments surveyed, 16,000 were bought by people who owned 3 or more dwellings. Real estate speculation is rampant.That year, South Korea's real estate price growth ranked first in the Asia-Pacific region.

Due to the lack of other investment channels, many wealthy Koreans choose to invest in real estate, and firmly believe that investing in real estate is a profitable business.Once you have the financial resources, everyone is proud to buy a house in a high-end residential area in the southern part of Seoul.By 2006, buying a 100-square-meter apartment in the Gangnam area of ​​Seoul would cost at least US$700,000 to US$800,000. Housing prices are close to 20 times their annual income, which has caused strong dissatisfaction among ordinary people. The expansion of the real estate bubble has caused the South Korean government to worry that "real estate speculation is endangering the stability of the economy and may have consequences like the popping of a champagne cork."In order to squeeze out the real estate bubble, the South Korean government has adopted a series of measures such as imposing heavy taxes on land transactions and the transfer of second and above housing units, increasing housing construction efforts, and increasing bank loan interest rates.These measures can curb the rapid rise of real estate in the short term each time, but ultimately fail to bring real estate prices back to a reasonable level.Often shortly after the implementation of a new round of policies, the real estate market begins to pick up again.After the outbreak of the global financial crisis, South Korea's real estate industry and the entire economy were hit hard again.

Spain's real estate bubble has multiple causes.On the one hand, a large number of "post-70s" and "post-80s" "baby boom" adults have married, increasing housing demand, and the influx of Latin American immigrants has further expanded this demand.In addition, the sunshine and beaches of some coastal cities in Spain have always been the first choice for holiday villas in European countries such as Germany and the United Kingdom.Spaniards themselves have a strong preference for buying a house, rather than renting a house. "People think that renting a house means losing money, which means that this person is unsuccessful." Therefore, 85% of the houses in Spain are bought by homeowners, which is the highest proportion in the European Union.In the capital, Madrid, only 14 percent of housing is rented out, far below Berlin's 70 percent and Paris' 55 percent. After Spain joined the Eurozone in 1999, loan interest rates dropped significantly, banks competed to provide mortgage products, and more and more Spaniards were able to borrow to buy houses.It is also from 2000 onwards that the growth rate of housing prices in Spain began to exceed the rate of income growth.The real estate bubble gradually inflated. By 2006, there were 860,000 housing starts in Spain throughout the year, while the number of new housing starts in the United States, which is much larger than Spain, was only 1.1 million in 2007.If the house price is compared with the family's annual disposable income, the highest house price in Spain is equivalent to 7.7 years of income for a family, while the highest in the United States is only 5.2 years. During the peak period of the bubble, there were tower cranes all over Spain from cities to villages, from the coast to the inland, new houses sprung up like mushrooms after a spring rain, house sales advertisements and house intermediaries bloomed everywhere, and major banks competed for loan customers. All kinds of mortgage advertisements bombard the audience in various forms. In 2009, loans to developers, builders and buyers of all Spanish banks reached 1.11 trillion euros, equivalent to 105% of Spain's GDP.There are many "subprime mortgages" among them: the borrower has a poor credit record, has a record of defaulting on repayment, applied for a loan that is greater than 80% of the property price, and has monthly loan repayment expenses accounting for more than 40% of income. With the outbreak of the global financial crisis, at the end of 2007, the huge bubble in the Spanish real estate industry began to burst, resulting in rising bank non-performing loans, increasing unemployment and falling house prices.By 2010, there were more than 1 million unsold houses in Spain. It is worth mentioning the affordable housing in Spain.During the inflating housing bubble, affordable housing in Spain fell from 60% of annual new housing starts in the 1980s to 10% in 2005.Due to the shortage of supply, it is often necessary to draw lots to determine who can buy affordable housing.This process also often breeds corruption. "In some cases, people who do not meet the conditions for buying public housing participate in the purchase, in some cases, they already own a house, and then buy such a house for rent, and in other cases, they buy the house, and then sell it , even without the prescribed lock-up period.” These situations are also very common in affordable housing in China. For the world's real estate industry, Dubai was once a myth, a place where countless architectural miracles were born.One-fifth of the world's cranes used to operate here, 250,000 construction workers worked here, and the project construction funds reached 100 billion U.S. dollars. Overlooking Dubai from a high altitude, two huge "palm trees" dot the blue sea.This is the "Palm Island" known as the eighth wonder of the world - "Palm Tree" is composed of some scattered, large and small islands, all of which are completed by artificial reclamation. The combination of garden-like amazing imagination and the luxurious style of ancient Arabian tycoons".There are villas, hotels, apartments, office buildings and commercial buildings on the island, and the owners are celebrities and rich people from all over the world. The giant sail-shaped Golden Sail Hotel towers above the sea.This luxury hotel is located on a small island 280 meters offshore and needs to be reached through a dedicated bridge.Each set of guest rooms is duplex, floor-to-ceiling glass windows can see the sea view at 270 degrees, lying on the bed, you can enjoy the beautiful view of the Arabian Gulf, which is half sea water and half desert. On land, the world's tallest skyscraper "Burj Khalifa" with a height of 818 meters and 162 floors overlooks the desert.The building is composed of connected tubular towers in a space-age style, and the geometry of Islamic architecture is used around the base - a six-petal desert flower.There are 56 elevators in the Burj Khalifa, with a speed of up to 18 m/s, which is the fastest and longest elevator in the world. But with the outbreak of the Dubai debt crisis, the myth was shattered, and Dubai house prices plummeted.Those magnificent and magnificent buildings are literally "built on sand".