Japan has probably shown the wildest swings in real estate prices of any country that we cover as can be seen in Figure 11.\u00a0\u00a0After the devastation of World War II and the inflation that followed, real estate prices crashed during the 1940s. Real estate prices showed dramatic increases during the 1950s and 1960s.\u00a0\u00a0The price of real estate increased five-fold in the 1950s and more than tripled in the 1960s. Prices increased 30-fold between 1949 and 1973, though they had only doubled since the end of the war.\u00a0\u00a0Prices fell after the 1973 peak, losing one-third of their value during the next five years.\u00a0\u00a0Between 1978 and 1989 another dramatic surge in prices occurred as the price of real estate more than tripled once again.\u00a0\u00a0It was said that at the top of the bubble, the imperial palace in downtown Tokyo was worth more than the entire state of California.\u00a0\u00a0Obviously, this was just a bubble, and it burst in 1989.\u00a0\u00a0The stock market and real estate steadily declined.\u00a0During the next 15 years, prices declined back to the levels they had been at in the 1970s and they have remained at those levels since 2005.\u00a0\u00a0Neither the price of real estate nor inflation has increased during the past 18 years.\u00a0\u00a0Both have flatlined.\u00a0\u00a0Given this, there is little prospect for rising real estate prices in Japan in the near future.<\/p>\n
![\"\"](\"https:\/\/maxrezmedia.com\/website_131ddb8a\/wp-content\/uploads\/2024\/08\/download-4-9.png\")
<\/p>\n
Figure 11.\u00a0 Japan Price of Real Estate after Inflation, 1945 to 2023<\/strong><\/b><\/span><\/p>\n The price of real estate in the Netherlands has shown dramatic swings over time.\u00a0 As Figure 12 shows, after a steady increase in the price of real estate between 1970 and 1978, real estate prices declined during the 1980s. Beginning in 1990, real estate started to slowly recover for the next twenty years, peaking in 2008 at about three-times the price level in 1990.\u00a0 Inflation rose faster than real estate prices for the next five years before a third dramatic increase in prices occurred. By 2022, real estate prices had risen by 80 per cent since 2013 after inflation.\u00a0 Prices have declined since then.\u00a0 Generally, however, prices have increased since 1990 and continued increases in or a stabilization of real estate prices are likely in the future.<\/p>\n Figure 12. Netherlands Real Estate Prices after Inflation, 1970 to 2023<\/strong><\/b><\/span><\/p>\n Like Australia, New Zealand has shown a steady appreciation in the price of real estate over time as can be seen in Figure 13. Price increases were minimal during the twentieth century, but after 2002, the steady increase in real estate prices in New Zealand began. Prices doubled between 2002 and 2007, remained steady for the next five years, then more than doubled again between 2011 and 2021.\u00a0 Prices have fallen back since then. Even with the most recent decline, real estate prices have increased almost five-fold during the past 40 years.\u00a0 There is no reason to suspect that real estate prices in New Zealand will not continue to increase.<\/p>\n Figure 13. New Zealand Real Estate Prices after Inflation, 1979 to 2023<\/strong><\/b><\/span><\/p>\n After the United Kingdom, Norway provides the longest-term history for real estate prices among the countries that we cover.\u00a0 Norway has calculated real estate prices going back 200 years and the data are provided in Figure 14. There was little change in real estate prices in Norway until about 1850.\u00a0 During the second half of the 19th<\/sup>\u00a0century, real estate prices steadily rose, increasing almost six-fold between 1847 and 1899.\u00a0 However, real estate prices remained dormant for the next 90 years. Prices declined until about 1920, rose during the Roaring Twenties, then declined again until the 1950s.\u00a0 Prices rose until 1987 with most of the increase coming between 1977 and 1987.\u00a0 Prices then declined for five years before beginning their current climb.<\/p>\n During the past 30 years, real estate prices have steadily risen faster than inflation. Real prices increased over four-fold between 1992 and 2022 and show no sign of declining.\u00a0 At some point, housing prices will have to take a breather, but there is no evidence of this yet.\u00a0 Just as in Sweden, real estate prices have increased during the past 30 years and show no sign of abating.<\/p>\n Figure 14. Norway Real Estate Prices after Inflation, 1819 to 2023<\/strong><\/b><\/span><\/p>\n Real estate prices showed a dramatic increase during the early 2000s but have stabilized since then.\u00a0 As can be seen in Figure 15, real estate prices rose by 50% between 1965 and 1974, fell back to 1980 levels, increased 50% again to 1984, then steadily declined until 1997.\u00a0 By 1997, real estate prices were below their levels in the 1960s after adjusting for inflation.\u00a0 During the next ten years, real estate prices tripled and peaked in 2007.\u00a0 Since then, inflation has risen faster than real estate prices, knocking about 20% off real estate prices since the peak.\u00a0 Given the political and economic problems that South Africa is currently facing, it seems unlikely that real estate prices will begin another rise in the near future.<\/p>\n Figure 15. South Africa Real Estate Prices after Inflation, 1965 to 2023<\/strong><\/b><\/span><\/p>\n Real estate prices in Spain steadily increased between 1971 and 2007, consistently beating inflation.\u00a0 Prices doubled between 1971 and 1978, declined until 1981, then more than doubled between 1987 and 1991.\u00a0 Prices remained steady between 1991 and 1998, then money poured into the real estate market which more than doubled in price between 1998 and 2007. At its peak in 2007, real estate prices had increased almost ten-fold between 1971 and 2007, but by then real estate prices had reached unsustainable levels, and prices declined until 2014 before stabilizing.\u00a0 Since then, real estate prices have moved in line with inflation. There is no reason to believe that real estate prices will once again start moving up.\u00a0 Spain simply does not have the economic resources to drive another increase in real estate prices.<\/p>\n Figure 16. Spain Real Estate Prices after Inflation, 1971 to 2023<\/strong><\/b><\/span><\/p>\n Real estate prices in Sweden have steadily increased during the past 25 years.\u00a0 As can be seen in Figure 17, after adjusting for inflation, housing prices were in a downward trend from 1970 to 1996.\u00a0 Despite increases in prices in the late 1970s and late 1980s, declines in prices in real estate prices relative to inflation in the early 1980s and early 1990s more than offset these increases. Between 1996 and 2021, real estate prices quadrupled.\u00a0 Prices declined during 2022, but they remain substantially above their levels in the past.\u00a0 Real estate prices are overstretched here, so a stabilization in real estate prices would not be unexpected.<\/p>\n Figure 17. Sweden Real Estate Prices after Inflation, 1970 to 2023<\/strong><\/b><\/span><\/p>\n Real estate prices in Switzerland have steadily increased during the twenty-first century.\u00a0 This was not true in the twentieth century.\u00a0 There were two real estate bubbles in Switzerland in the 1900s.\u00a0 The first occurred in the 1970s, with prices increasing by one-third in the early 1970s, then giving it all back in the decline that followed.\u00a0 There was a second, larger bubble during the 1980s.\u00a0 Real estate prices rose by around 70% in the 1980s, but all of this was given back during the 1990s.\u00a0 The increase in prices since 2000 has been steadier and over the past 20 years, prices have risen by around 80%. Despite the appearance of the graph in Figure 18, real estate prices have not moved as dramatically in Switzerland as they have in other countries. Given Switzerland\u2019s past, it seems likely that real estate prices will fall back, but it is unlikely that prices will return to the levels they were at in 2000.\u00a0 Since Switzerland has such low inflation, having inflation beat real estate prices for the next decade seems unlikely to occur.<\/p>\n Figure 18. Switzerland Real Estate Prices after Inflation, 1970 to 2023<\/strong><\/b><\/span><\/p>\n There is more history on real estate prices in Great Britain than in any other country.\u00a0 Data are available from 1290 to the present.\u00a0 As Figure 19 shows, there was a decline in real estate prices during the Middle Ages, especially after the Bubonic Plague hit England in the 1340s. The number of people declined dramatically, but the amount of housing stayed the same leading to a decline in housing prices.\u00a0 Real estate prices rose in the 1500s along with the general inflation that hit Europe after the discovery of silver in the Americas. Prices remained stable again until the late 1700s when another increase in real estate prices occurred.\u00a0 A final increase in real estate prices occurred in the 1910s during World War I.\u00a0 All of these price increases since the 1500s, however, were in line with inflation in Great Britain during each of those time periods causing little real change in the level of real estate prices.<\/p>\n The real increase in real estate prices after inflation occurred beginning in 1940.\u00a0 Housing prices increased almost ten-fold between 1939 and 2007 with peaks in 1948, 1973, 1989 and 2007. Since the 2007 peak, real estate prices have declined about 20% from their high.\u00a0 Between 1995 and 2007, real estate prices rose by 150% after inflation, one of the largest increases in British history.\u00a0 It will probably take the rest of the decade for housing prices to catch up with the trend that began in 1939, but one should expect that housing prices will once again increase in the 2030s.<\/p>\n Figure 19. United Kingdom Real Estate Prices after Inflation, 1290 to 2023<\/strong><\/b><\/span><\/p>\n The Great Financial Crisis in 2007-2008 was driven by the collapse in the real estate market.\u00a0 This made everyone aware of the impact of real estate as an asset on the rest of the economy because until then housing prices had been relatively stable during the previous 50 years.\u00a0 More people invest in real estate than in stocks and bonds, so real estate\u2019s behavior as an asset class is an important consideration.\u00a0<\/p>\n Figure 20 shows the inflation-adjusted price of housing in the United States since 1890 using the Case-Shiller Housing Price Index.\u00a0 As the chart shows, housing prices were stable until World War I, declined between World War I and World War II, and remained stable between 1952 and 1996, with small peaks at the end of the 1970s and 1980s. The real estate market has gone through two bubbles since then up until 2007 and up until 2020.\u00a0 Each decline was the result of higher interest rates, an economic slowdown, or both. It appears that real estate prices have peaked after a second ten-year run.\u00a0 With mortgage rates rising, the ability to buy real estate has declined, so we could well see real estate prices declining or remaining stable for the rest of the decade.<\/p>\n Figure 20. USA Case-Shiller Housing Price Index after Inflation, 1890 to 2022<\/strong><\/b><\/span><\/p>\n Global Financial Data has put together an index of world real estate prices, weighting each country by its GDP.\u00a0 The index includes all of the countries discussed in this Guide with data on the United Kingdom, Norway and United States since 1890, Japan since 1945 and most European countries since 1970. As Figure 21 shows, there was very little appreciation in housing prices after inflation between 1900 and 1960.\u00a0 There were small increases during the 1960s, but the first bubble occurred between 1970 and 1980.\u00a0 Prices declined during the early 1980s, but a second increase occurred in the late 1980s.\u00a0 Real estate prices were in a downward trend during the 1990s but rose a third time between 2000 and 2007.\u00a0 Since then, real estate prices have kept level with inflation.\u00a0<\/p>\n There is no evidence that a fourth global real estate bubble is on the horizon, but a new bubble will occur at some point in the future. Bubbles last about a decade, so if one were to begin, it would probably last into the 2030s.\u00a0 When it will begin is anyone\u2019s guess.<\/p>\n Figure 21. Developed World Real Estate Prices after Inflation, 1890 to 2023<\/strong><\/b><\/span><\/p>\n This review of 50 years of real estate prices in 20 different countries shows how independent the national real estate markets are of one another.\u00a0 Virtually every real estate market shows different behavior from other countries.\u00a0 This is true within countries as well.\u00a0 The market for real estate in California is completely different from the market for Iowa.\u00a0 There is no reason to believe that real estate markets will become similar in the future.\u00a0 Every piece of real estate is unique, and trends in real estate prices appear to be even more unpredictable than equity markets.<\/p>\n \u00a0<\/p>\n","protected":false},"excerpt":{"rendered":" Bryan Taylor, Chief Economist, Finaeon Japan Japan has probably shown the wildest swings in real estate prices of any country that we cover as…<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[151,1],"tags":[],"class_list":["post-3119","post","type-post","status-publish","format-standard","hentry","category-august-2023","category-insights"],"acf":[],"_links":{"self":[{"href":"https:\/\/maxrezmedia.com\/website_131ddb8a\/wp-json\/wp\/v2\/posts\/3119","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/maxrezmedia.com\/website_131ddb8a\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/maxrezmedia.com\/website_131ddb8a\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/maxrezmedia.com\/website_131ddb8a\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/maxrezmedia.com\/website_131ddb8a\/wp-json\/wp\/v2\/comments?post=3119"}],"version-history":[{"count":4,"href":"https:\/\/maxrezmedia.com\/website_131ddb8a\/wp-json\/wp\/v2\/posts\/3119\/revisions"}],"predecessor-version":[{"id":3136,"href":"https:\/\/maxrezmedia.com\/website_131ddb8a\/wp-json\/wp\/v2\/posts\/3119\/revisions\/3136"}],"wp:attachment":[{"href":"https:\/\/maxrezmedia.com\/website_131ddb8a\/wp-json\/wp\/v2\/media?parent=3119"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/maxrezmedia.com\/website_131ddb8a\/wp-json\/wp\/v2\/categories?post=3119"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/maxrezmedia.com\/website_131ddb8a\/wp-json\/wp\/v2\/tags?post=3119"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}Netherlands<\/strong><\/b><\/span><\/h3>\n
![\"\"](\"https:\/\/maxrezmedia.com\/website_131ddb8a\/wp-content\/uploads\/2024\/08\/download-25.png\")
<\/p>\nNew Zealand<\/strong><\/b><\/span><\/h3>\n
![\"\"](\"https:\/\/maxrezmedia.com\/website_131ddb8a\/wp-content\/uploads\/2024\/08\/download-1-17.png\")
<\/p>\nNorway<\/strong><\/b><\/span><\/h3>\n
![\"\"](\"https:\/\/maxrezmedia.com\/website_131ddb8a\/wp-content\/uploads\/2024\/08\/download-2-16.png\")
<\/p>\nSouth Africa<\/strong><\/b><\/span><\/h3>\n
![\"\"](\"https:\/\/maxrezmedia.com\/website_131ddb8a\/wp-content\/uploads\/2024\/08\/download-3-13.png\")
<\/p>\nSpain<\/strong><\/b><\/span><\/h3>\n
![\"\"](\"https:\/\/maxrezmedia.com\/website_131ddb8a\/wp-content\/uploads\/2024\/08\/download-5-7.png\")
<\/p>\nSweden<\/strong><\/b><\/span><\/h3>\n
![\"\"](\"https:\/\/maxrezmedia.com\/website_131ddb8a\/wp-content\/uploads\/2024\/08\/download-6-6.png\")
<\/p>\nSwitzerland<\/strong><\/b><\/span><\/h3>\n
![\"\"](\"https:\/\/maxrezmedia.com\/website_131ddb8a\/wp-content\/uploads\/2024\/08\/download-7-5.png\")
<\/p>\nUnited Kingdom<\/strong><\/b><\/span><\/h3>\n
![\"\"](\"https:\/\/maxrezmedia.com\/website_131ddb8a\/wp-content\/uploads\/2024\/08\/download-8-4.png\")
<\/p>\nUnited States<\/strong><\/b><\/span><\/h3>\n
![\"\"](\"https:\/\/maxrezmedia.com\/website_131ddb8a\/wp-content\/uploads\/2024\/08\/download-9-3.png\")
<\/p>\nWorld<\/strong><\/b><\/span><\/h3>\n
![\"\"](\"https:\/\/maxrezmedia.com\/website_131ddb8a\/wp-content\/uploads\/2024\/08\/download-10-2.png\")
<\/p>\nConclusion<\/strong><\/b><\/span><\/h3>\n