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Archived Articles
Simeon Mitropolitski is a Canadian analyst, of Bulgarian origin, and a former syndicated columnist with the Bulgarian News Agency (BTA). He is the author of several hundred articles dealing with hot political and economic topics, both national and international.
He was part of the first group of Bulgarian intellectuals and students that began the opposition movement that finally put an end to the communist regime in this country in 1989, and in 1996-1997 participated in international observation teams during the elections in several Balkan countries - Romania, Albania and Bulgaria.
In 2002 Simeon and his family moved from Bulgaria to Canada where they live now in Montreal, province of Quebec. Simeon is a Master of Political Science from McGill University and a B.A. of Political Science and History.
Global Real Estate Project
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Global market: Up, down, or neutralHow's the global real estate market doing? The question is simple, the answer however isn't. It's not just because there are many countries with their proper market trends, trends that cannot be amalgamated. In fact, the problem sometimes comes from the method we use to calculate these trends. It may be that the markets are moving up and down at the same time in one and the same country. Sometimes it may be attributed to different interpretations coming from different analytical sources. It's surprising when such mutually conflicting conclusions come from one source only. Yet, this is what we read in recently posted data. After a closer look, however, we see that both readings, the pessimist and the optimist, make sense.
Case for pessimismMore countries and cities show fall in the dwelling prices; fewer countries and cities still move up. This is the reason why the overall title is that the global house price boom has ended. This is, of course, too premature and too strong as a conclusion regarding the data. The point in favor of the contrary is that some countries are still moving up. Looking more closely, however, it seems that the authors are basically right, although with some qualifications. Big countries, with traditionally higher real estate market development, are more likely to go down than up. For the smaller countries, with traditionally less developed market, it's the opposite that's true.Another point for pessimism is that there is a clear and general trend toward market slump, at least in some countries and cities. This means that many of the markets that moved up just a year ago, are now moving down. As for the opposite trend, there is just one illustration in China, at the top of the first table. Another reason for pessimism is that those markets that still move up are doing less well than a year ago. Third reason is that the markets that were performing badly a year ago are in even worse shape right now. The trends are clear, more and more markets, but not all, are moving down; those that are still moving up are performing worse than before.
Case for optimismThere are two tables, and the second looks less frightening than the first. What's the difference between the two? In the first, the prices are inflation-adjusted; in the second, they are nominal. In other words, the prices are either put in comparison to the general inflation or are presented in nominal terms. Thinking about inflation usually involves associations like gas prices, seasonal food prices; things that can change price tags from day to day. Houses however are also goods perhaps the most expensive goods most of us would buy during their lives. The residential prices also count within the consumer prices index, not in all countries, but generally they do count.There is no justification to consider a real estate market on positive territory only if the residential houses are moving up faster than the general inflation. This would rather suggest an especially robust market, a boom rather than gradual growth. The second table shows exactly the scenario when the dwelling prices, although moving up at lower speed than the general inflation, are nevertheless still moving up. The picture here is very different from the frightening first table. Most markets are still moving up, some at faster speed than a year ago, some at slower speed, but nevertheless, those markets that clearly fall down in absolute terms, are in minority.
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