The problem of being an economist or a financial analyst is that sometimes we seem bipolar: a double-digit growth rate is both reason for celebration and for alarm. That has been especially true when talking about housing markets since 2008. A booming market tells us that the economy is prosperous while it brings back memories of the bubble that triggered the greatest recession in a century.
You know what Portugal right now has in common with Japan in 1991; the United States in 2006 and Spain in 2007? They were all times that followed eight years of incredible increases in housing valuations. In Japan, Spain and the United States, house prices peaked that same year and followed a real estate crisis
Why should we expect this time to be different in Portugal?
Isn’t it a formula that when prices increase by a certain percentage, gravity just brings valuation down to earth?
Is it time to raise awareness of a bubble about to burst before it is too late?