NEWS OPINION: Irrational exuberance for property investments

Irrational exuberance for property investments

Business World newspaper and online - June 12, 2016

"There is no property bubble, the Bangko Sentral ng Pilipinas (BSP) assures us again, as it had assured the market repeatedly since the sub-prime mortgage crisis in the US in 2006 that led to the global financial crisis in 2008-2009. It’s not going to happen to us, we are told. BusinessWorld bannered: “BSP index shows no bubble in sight” (06.06.2016)

But why would the regulator, BSP, take upon itself the dangerous job of announcing whether there would be a property bubble or not? Well and good if there is indeed no bubble, but perhaps the “good news” or the clean bill of health should not come from the trustee of the people’s money and regulator of banks as this might suggest a somewhat misplaced endorsement of the players (developers and lenders) in a specialized industry which it does not control.

With this subliminal endorsement, the “all clear” is effectively given to the public to proceed with investments in property as the logical fallback in the long-playing scenario of low savings and other investments rates -- and low interest rates have been purposely held down by the BSP itself to expand money supply to prod activity in the market. If indeed there is no property bubble (yet) as the BSP likes to announce repeatedly, its denials might encourage the “herd mentality” that best describes how bubbles are formed in a market with thinning options...."

READ ON - http://www.bworldonline.com/content.php?section=Opinion&title=irrational-exuberance-for-property-investments&id=128883

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Previous opinion piece by this writer - http://sohocentralcondominium.blogspot.com/2013/04/why-condo-corps-fail-century-you.html