The size, elasticity, mortality and, in fact, the very existence of housing bubbles are topics of debate and discussion among U.S. real estate experts. These same conversations are taking place at a global level, too, with questions of whether rapid inflation of home prices in multiple nations marks the existence of a global housing bubble.

Mark Lee Levine, director of the Burns School of Real Estate and Construction Management at the University of Denver in Colorado, said bubble-talk is not unique to the United States. But the factors driving home prices in specific markets are so varied, within the U.S. and within other nations, that the question of bubbles becomes a very complicated answer, he said.

Limited land availability and conservative land use policies can cause spikes in prices, for example, Levine said. “Sometimes you have artificial controls and sometimes you have physical controls. There is only so much land in Singapore. You’ve got a limitation on the amount of opportunity there. In other places, like Boulder, Colo., there are such difficult government restrictions that prices keep going up.” But when markets heat up substantially more than they have historically, there certainly is concern about sustainability, he said.

About 15 years ago, Levine began a project to study and report on real estate markets around the globe. The cost of a two-bedroom apartment in a prestigious area of Makati City in the Philippines would cost about $171,000 to $198,900, for example, according to information at the site. This Global Real Estate Project now includes real estate information for about 110 nations. Levine also coordinated the production of a soon-to-be-released book on international real estate that features about 30 authors from around the world.

The housing bubble is definitely on the minds of real estate professionals around the world, Levine said. During a visit to Australia he heard real estate professionals express worries over whether the housing boom there was a bubble bound to burst. “We talk about (bubbles) all the time,” he said.

The U.S. real estate market definitely sends ripples around the world, Levine said. And a housing market boom in the U.S. directly or indirectly impacts the international housing market. He said he has heard the phrase uttered by real estate professionals in other countries, “Somebody sneezes in the United States and we get sick, too,” and it seems to fit. “As the U.S. goes, we all go. There’s no question that other countries look and are seeing what we are doing. Our policies, although not legally controlling, are something they look at.”

A surge in home construction activity can increase import and export activity of construction-related products, he said, which can spur economic growth in this nation and other nations, he said. Also, real estate is becoming more of an international industry because of the increasingly global economy.

Amber Gitter, a Chicago-area Realtor who works with international clients, said, “If anyone says that real estate is a local issue they’re wrong. Economies tend to go in tandem with each other. Countries are somewhat tied to the U.S. We’re all looking to each other to see what works.” As for bubbles, she said, “Real estate is a function of income. When appreciation rises faster than income, then that’s definitely a bubble.”, a global real estate research firm based in South Africa, reported this month that home prices increased most dramatically in Hong Kong in the past year. South Africa, the United Kingdom, New Zealand, Australia, Spain, Ireland, France, Italy and Norway, also topped the list of international locations with high home-price increases.

Prices in Hong Kong soared about 27.1 percent from April 2003 to April 2004, driven in part by post-SARS confidence in the region, a boom in visitors from other parts of China, and a “perceived shortage in the future supply of residential units as the government intends slowing down the pace of land sales,” according to the report.

Home prices were up 24.3 percent in South Africa and 19.5 percent in the United Kingdom from May 2003 to May 2004, the company reported, while New Zealand’s home prices drove up 19.2 percent from April 2003 to April 2004. Japan, Germany, Singapore and Israel were the worst performing nations on the list of 21 countries tracked by Japan reported a 5.7 percent drop in home prices from the final quarter of 2002 to the final quarter of 2003, while home prices in Germany dropped 1.7 percent in that period.

The Economist magazine also tracks international home prices, and an article published this month questions whether housing markets in some nations are “ripe to burst.” The article states that home prices in Spain, Britain, Netherlands, Australia, Ireland, New Zealand and the United States are inflated, and “prices would need to fall to get back to their long-term average” by 10 percent to 30 percent.


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