What is an economic bubble?

Possibly you have heard that a bubble has burst or that we are facing a new real estate bubble. Both concepts want to refer to the same thing, and it is an exponential increase and without reason of property or real estate (housing, in general) for which, previously, there has been speculation.

To begin to notice the effects of a bubble we will have to look at the prices of this type of property that, from one moment to the next, begin to rise without a logical reason. As the price of these assets rises, savvy investors become more interested in them and both their demand and prices increase.

In this situation, the demand for these assets is high, so the bidding companies generate more properties (more flats, more homes, etc.). At this point, the bubble begins to form as prices will not stop rising at the expense of the supply of real estate.

In the In the case of Spain, the real estate bubble occurred from 2009, when the economic crisis of 2008 exploded worldwide. explosión It occurred after the liberation of the land market, which increased the value of the developable land.

Since the land was more valued, the construction companies dedicated themselves to creating more and more houses, thus generating jobs. What the construction companies did not count on was the increase in the price of housing, which caused citizens to ask for more credits to banks to acquire these homes. And since citizens could not borrow so much, a housing bubble began to form, followed by a multi-level crisis.

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