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I say things on Twitter

1/8/13

Q: What's the best way of causing a housing bubble?

A: Tell the world that your economy is entering a housing bubble.

This week Peru financial analysis house Centrum published a report which has been picked up by the local bizmedia who scream, "Peru is entering an incipient real estate bubble". So far so good, but the reasoning is the thing that's going to get all those monied speculators a-licking of them lips. In the words of Felipe Zegarra of Centrum (translated):
"We can divide a housing bubble into two stages. On is very dangerous and speculative when people buy simply to speculate that prices will keep on rising, and when they start to drop decide to sell and it's then that prices drop sharply. This is the most dramatic or extreme situation. I do not believe that we are at that point. But there is a stage previous to this when the bubble is formed, when money appears and begins to cause a stong rise in prices. Therefore there is a "incipient bubble" and a "speculative bubble". I believe that we are in the first stage, the "incipient bubble."
Zegarra also goes on to note that the loose money policy in the USA may also contribute to the Peru price boom. That translates as 'the gringos are gonna buy a shitload of apartments in swanky Lima zones, so get on now boys'. You have been warned.