Japanese buyers push up prices

”We are in the beginning of an international movement of money of historic proportions, something on the scale of the Marshall Plan after World War II or the British influence after the First World War,” said Jon C. Minikes, a partner at Jones Lang Wootton, an international real estate consulting firm. Besides real estate, the Japanese have become major investors in stocks, bonds and artwork in the United States.

From the New York Times published December 15th, 1986

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blueskies
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blueskies

got HAM?

crabman
Guest

But we're talking about the chinese buying in Vancouver. Don't you know it's different this time?

Krazy Kanuk
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Krazy Kanuk
I love reading these old articles. I think more people should, whenever they say "this time is different" I'm working near Squamish temporarily, and one of the young electricians was telling me about his brother. They both work for BC Hydro, his brother as a lineman. Anyhow, he was telling me about the new house that his brother is building. $800K!!! I couldn't believe it. I'm sure BC Hydro pays decent, and a lineman can make good cash, but I would think you need to make $200K a year to support that kind of mortgage, and I'm pretty sure linemen don't make that. Anyhow, I'm not that old, but I remember all these "new paradigms", and "evil enemies" 80's – the red threat from Russia 80's – the yellow threat #1 (the Japanese) late 90's – the "new economy" (dot… Read more »
Not much of a name..
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Not much of a name..

@Krazy Kanuk:

People love to extrapolate to infinity, weather it’s sustainable or not.

Couldn't have been said any better.

WFT?
Guest
WFT?

@Krazy Kanuk:

I don't think that the Japanese have ever been called "yellow". I think that term is reserved for chinese. Anyone know for sure?

Anonymouse
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Anonymouse

@Not much of a name…:

"Couldn’t have been said any better."

You could've spelled "whether" correctly 😉

Not much of a name..
Guest
Not much of a name..

@Anonymouse: I didn't feel the need to be critical like that. You get the point don't you?

Anonymouse
Guest
Anonymouse

@Not much of a name…:

Of course. It was a joke.

Patiently Waiting
Member
Patiently Waiting

@Anonymouse: I gotta say though, I hope this weather isn't sustainable. It looks nice out there, sunny May day, but we have a freakish chill in the air.

Krazy Kanuk
Guest
Krazy Kanuk

@Anonymouse: speeeleng waz nevr my strong soot 🙂

rp1
Guest
rp1

Of course, the Japanese went right on buying for another 3 years. I think we are a bit beyond 1986 in the China bubble though. I do not think they can avoid a hard landing, and I think their efforts to avoid one so far have only made things worse.

chip
Guest
chip

If you look at this graph of Japanese GDP growth from the 80s you will see it never rose above 2.5% and was often much less. So Japanese wealth at the time was clearly the product of an asset bubble with no underlying wealth creation.

China however is really growing, even if it is from a low base. Property bubble aside the country is undergoing massive and unprecedented wealth creation, the results of which will affect us one way or another.

bubbly
Member
bubbly

@chip: You have a point, however, the Chinese GDP numbers are compiled and reported by the Communist party and include such productive enterprises like the building of ghost cities and empty mega-shopping malls.

chip
Guest
chip

Sorry here's the link:

http://www.tradingeconomics.com/japan/gdp-growth

Bubbly, I see your point but the govt can't mask that country's huge appetite for energy and resources, which reflect the underlying growth.

Anonymous
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Anonymous

"Bubbly, I see your point but the govt can’t mask that country’s huge appetite for energy and resources, which reflect the underlying growth."

Ummm sure – like you don't have a huge appetite for consuming raw materials and energy when building massive amounts of infrastructure that will never be used (new airports, terminals, mega cities, etc)

patriotz
Member
Active Member

There were some regional RE bubbles in the US in the late 80's, but there's no evidence that Japanese buyers had anything to do with them. Japanese RE purchases were of commercial properties and I don't think they ever bought individually titled residential RE in appreciable numbers.

Chinese purchases (offshore and more significantly immigrant) are clearly much more a factor in Vancouver today, but I still feel that today's prices would be impossible without the mass of local buyers supported by easy credit.

IMHO the biggest impact from a Chinese RE bust in Vancouver would come from an associated commodities bust and its impact on the Western Canadian economy, not from a falloff in RE purchases by Chinese. Which would be a repeat of the 80's really.

jesse
Member

"China however is really growing, even if it is from a low base"

This is true. China also has: an inflation nut that's proving difficult to crack, a waning competitive advantage relative to its peers, and slow and inefficient fiscal policy projection mechanisms. Unless China is unlike every other developing-world success story in the past 500 years, it won't be a straight line.

VanRant
Member
VanRant

Can we change HAM to SPAM as in "Stupid Parasitic Asian Money?"

HAMster
Guest
HAMster

@WFT?:

Anyone know for sure?

Q: How do you differentiate between Japanese and Chinese these days?

A: With Geiger counter!

patriotz
Member
Active Member

Mish: Australia headed for bust.

http://globaleconomicanalysis.blogspot.com/2011/0

Except for my economist friend Steve Keen, I have to ask: Has anyone down under learned anything from the property bust in the US?

Well they are on the other side of the world after all. What's our excuse?

space889
Guest
space889

@patriotz: Canadians believe we are superior to US in every way. 🙂

jesse
Member

@patriotz: "What’s our excuse?"

Australians instituted foreign ownership restrictions and have higher interest rates. Did foreign restrictions have much tangible effect? I don't think so, given most buyers were locals, but it arguably scared off some of the momentum money.

If Vancouver thinks it has some hot money sloshing around the property market making it unaffordable for our Sons and Daughters, the solution is simple: come up with some foreign ownership law that has no real effect on the market but scares everyone else into thinking it will kill investment. How do I know it will work? Look at Richmond sales after an earthquake half a world away. Money will leave at the first signs of trouble.

Write your MLA candidates. An election is coming up and they love wedge issues, especially ones that blame non-voters for voters' ills.

jesse
Member

Oh, and politicians absolutely LOVE laws that have no real effect but makes it look like they're doing something — the first law of management in politics is not to screw anything up. I can think of a few laws enacted by the Clark Liberals recently that fall along those lines…

observer
Guest
observer

Calgary is starting to go negative again … last time this happened was just before the financial crisis. Coincidence?

Anonymous
Guest
Anonymous

1) It'll last longer, when taking into consideration of China's population vs Japan's.

2) Japan practices a different value system, i.e. putting other people's sensitivity above own. Hint: hoarding & rampant profiteering have brought out riots in the Philippines, Indonesia, Vietnam, and Malaysia.

3) Damage to other countries/cultures is minimal and controlled, based on what I witnessed of Japan's generosity in restoring art & historical sites in Milan, Vatican, Florence, Hawaii, etc.

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