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per chi non è abbonato oggi il Financial Times ha dedicato al tema "Lo scoppio della Bolla Immobiliare in Spagna" un intera sezione di discussione con il grande Charles Dumas di Lombard Street Research --------------------- ^Spanish property and other bubbles#http://www.ft.com/cms/s/e60493e8-ef3a-11db-a64e-000b5df10621.html^ Last updated: April 27 2007 14:43 A massive bubble in the Spanish housing market is set to implode, according to Charles Dumas, chief economist at Lombard Street Research. The impact is likely to be felt beyond the country’s borders. Mr Dumas points out the whole of the Euroland grew on the back of Spanish demand until 2006. With 11 per cent of Euroland’s GDP, Spain provided one third of its incremental domestic demand between 2002-06. Artificially low interest rates and the ease of financing Spanish deficits in the common currency induced a housing bubble which is now set to burst. Mr Dumas, a highly influential and experienced economist in markets, can answer your questions on the implications not only for Spain but other markets. He can also answer your questions broader market issues such as how far the US economy will slow this year, what will be the next move for the US Federal Reserve on interest rates, the relative appeal of Europe over the US for investors, are corporate profits at a cyclical peak, are equity markets due for a correction. Mr Dumas has extensive experience in the financial world as an investment banker, economist and journalist. At JP Morgan, he worked as managing director of mergers and acquisitions in new York, head of research in London, and international economist in New York. He also worked for General Motors as European economist and the Economist as a journalist. Mr Dumas answers readers’ questions. ..................................................................... Spaniards have a very strong view on holding a house, which is why renting as a percentage of living options is very low. Instead of renting a house because young people (20-30) cannot afford to buy one at current levels, they tend to prefer to live with their parents until an average age of 29, until they have accumulated enough funds to purchase one with a partner. On the other hand, there are around 1-2m empty houses, bought for investment/speculation, which could reach the market. Do you think the culture factor will make a significant difference in the slowing of housing prices in Spain, rather than a dramatic drop in prices as it has occurred in previous housing bubbles elsewhere? Marco Guerrerio, Barcelona Charles Dumas: House price excesses often work themselves out in a long period of roughly static prices, falling in real terms, for the kind of reasons you refer to. Spaniards are not alone in conservative views on this! But the “bank” of empty houses you refer to may have to be sold at concessionary prices if all those younger Spaniards now living with their parents play their cards carefully! ............................................................................................................................................ What will be the repercussions of the bursting of the Spanish real estate bubble for the housing markets in other Mediterranean markets like Greece? Kyprianos Exarchos, Athens Do you think Irish property bubble will be the next to burst after Spain? Will the ECB consider these events while setting the monetary policy and tighten the interest rates when they sit next in June? How do you position the UK property market in short-long term? Kolluru Bhaskar, Ireland What effect does the Spanish property situation have on Portugal, in particular, the Eastern Algarve? Malcolm, UK We are witnessing burst in property bubbles around the world (US, Spain, India, etc). Do you think we are likely to see the same in UK and when? Elvin Ahmovic, London You say that a massive bubble in the Spanish housing market is set to implode and that the impact is likely to be felt beyond the country’s borders. Can you please tell me what will be the likely impact of it in the UK market in general and in the UK housing market in particular? Fabio Carrera, London Charles Dumas: These various property bubbles has been the counterpart of the Eurasian saving glut (in China Japan, Asian Tigers and German-centred, north-central Europe). Glut countries have to find a home for their excess saving, and a source of demand for their exports. Deficit countries have responded to the resultant pleasant interest-rate and bond-yield surprises by household borrowing, house-building growth (especially in the US and Spain) and debt-financed consumer spending. But whereas a build-up of assets in a savings-glut country has no natural ceiling, the build-up of household debt certainly does. The Eurasian savings glut either has to shrink – at the moment it is mostly growing still – or the world will have a global shortage of demand, once debt capacity has been reached or exceeded in borrowing countries. I cannot comment on all the countries mentioned, but in Britain we expect a difficult time for housing and the economy next year. Luckily, Britain does have its own monetary policy and currency to take some of the strain, though its over-stretched public finances mean Spain is the better placed fiscally. ............................................................................................................................................ To what extent will Spanish fiscal policy be able to offset the adverse housing market shock, given that Spanish monetary policy, and, to some degree fiscal policy, are constrained by the ECB and EU membership? Daria Luchinskaya, Oxford What level of price readjustment do you project for prices in the Spanish housing market over the near term? R Tellegen, Madrid Charles Dumas: Basically, I think the developing excess of supply over demand is likely to leave house prices below year-before levels by some time in 2008, with little chance of revival for a few years. Given the unfavourable development of relative Spanish unit labour costs vis-à-vis other Euroland countries – and especially non-EMU countries now the euro is strong – the normal policy would be devaluation and tight monetary policy, to restore export competitiveness and demand while knocking the froth off the real estate excesses. Within the euro this is not possible. The Milton Friedman point in favour of FX adjustment was that it is similar to changing to summer time: easier to move clocks by an hour, than to have every firm move its working hours, etc. In Spain, firms will somehow have to restore competitiveness the hard way: productivity gains and/or relative wage declines. Meantime, fiscal policy can soften the blow by shifting from the present small surplus into deficit. But the legal constraint on going into deficit is much tougher than in most countries. And first, Mr Zapatero has to admit there is a problem! ............................................................................................................................................ Do you think that massive immigration is the most simple explanation for the quantity and quality of Spanish growth? Juan, Mallorca, Spain Charles Dumas: To be sure, immigration is a factor. Employment growth of 4 per cent a year has “used up” or accounted for almost all the GDP growth. Some of that has been to accommodate immigrants. But some of it has brought down unemployment from 22 per cent to 8 per cent over the past 10 years. The labour force participation rate has also gone up massively. Population growth has been at a little over 1 per cent a year, so the migration effect is modest. ............................................................................................................................................ Do you agree that the current fear regarding the housing bubble in Spain is due to the press hype rather than actual facts of how real estate assets trade? Antonio Marin, London On the very same days when the real estate bubble apparently exploded and Spain was, according to the FT, “going on a downward spiral of recession” the Bank of Spain announced that the economy has grown 4 per cent in the first quarter. Do not you think that the pessimism has more to do with prejudice than based on a sound analysis of Spain’s fundamentals? Francisco Martinez, Vienna Charles Dumas: Interesting that the bulls are from outside Spain! Spanish housing remains “affordable” by historic standards, owing to interest rates remaining well below where they would be if set by the Bank of Spain for Spain alone, outside the euro context. But by 2003 (latest data) Spain was already well clear of Italy, Germany and France in dwellings per 1,000 inhabitants, the numbers being 513, 461,454 and 440, respectively. By now, Spain’s over-provision will be far greater, both absolutely and relatively. Meanwhile, Spanish household debt has risen just since 1999 from 75 per cent of disposable income to 133 per cent (end-06) – now above the US level, though still short of Britain and Australia! The growth of house prices has fallen from nearly 20 per cent at the peak three years ago to just over 7 per cent now. How many houses do Spaniards need – or want, given high and rising debt levels and interest rates? As demand slips back, gross over-provision is likely to lead to a slump. ............................................................................................................................................ Do you think that this kind of bubble constitute a necessary flaw in the capitalist system? Pedro Muoz, Orihuela, Spain Charles Dumas: The capitalist system is conditioned by human nature, which lends itself to massive mood swings. If these are acted on, excessive ups and downs may result. This is not necessarily a “flaw”. The view of Joseph Schumpeter was that booms give you new techniques and fresh capacity, busts sort out the wheat from the chaff. Cycles are creative. ............................................................................................................................................ I feel the prime Costa Brava areas will be somewhat, if not totally, cushioned from the impact of a Spanish property market collapse. Catalunya has such high quality property stock, highly controlled building. I believe it will continue to prosper as an area to make a property investment/own a second home. Do you agree? James Harrison, Soho Which parts of the property market do you think will be most affected by the implosion? Flemming Morgan Charles Dumas: Regional impacts will clearly differ. Generally, when booms end and there is a shake-out it is the area of greatest excess in the boom that suffers most. If supply has been well contained in Catalunya that may protect it. ............................................................................................................................................ The US also has a bubble. Other countries as well: Turkey, SA, Israel – will they collapse too? Lucy Charles Dumas: US housing is already collapsing. We expect this to spread to a widespread US “hard landing” – after the past four quarters of 2 per cent growth maybe four quarters of 1 per cent growth. The problem is that slower growth has not stopped inflation of prices and labour costs accelerating, so the Fed is likely to hang tight. Unemployment of 4½ per cent in the US is well below the “inflation-neutral” level of 5¼– 5½ per cent, so growth will have to be below-trend (3 per cent) until it backs up. I am afraid I do not know enough to comment on Turkey, South Africa and Israel. ............................................................................................................................................ Do you think that the end of the Spanish property bubble will put an end to the 13-year period of growth of the Spanish economy? Borja, Madrid Charles Dumas: I would not necessarily expect a recession, because the rest of Europe is growing strongly. But productivity growth has been below ½ per cent a year for 10 years, while labour costs have risen strongly, so Spain is much less competitive than it used to be, despite low costs at the start of the euro in 1999. This suggests 2-3 years at least of growth below the Euroland average, as devaluation with tight monetary policy – the natural solution – is not an option within the euro. And Euroland trend growth is only 1½ to 2 per cent on our analysis.

Quando gira il mercato ?

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