Pop Goes the Bubble
The difference between America and Australia: In America everybody's talking the possibility of a real estate bubble. In Australia, they're living it.
Real estate prices in Sydney, which rose by about 175 percent from 1994 to 2004, have fallen 10 percent since then and some expect the market to fall farther. "Sydney is undoubtedly the basket case of the national property market," says the Sydney Morning Herald.
Investors are fleeing, says the Australian. "Thousands of home owners are trapped
with mortgages higher than the value of their properties as house prices fall," the national daily reported earlier this month. The investment bank JP Morgan forecasts a 10 percent fall in house prices nationally and regards Sydney and Melbourne as the most "overvalued" housing markets.
Real estate deflation is a worldwide trend, says the International Herald Tribune. "The latest economic data from a broad array of countries indicate that house prices are either rising at a slower rate (France), stagnating (the Netherlands), or dropping (Australia). No one is panicking, especially since underlying economic indicators are good. But there are signs of psychological effects," says the New York Times-run Paris-based daily.
Like quiet discussions of that old question, "It can't happen here, right?"
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