This is not the moment to buy properties, warns professor from EESP

According to Samy, the principle of buying something cheap and selling it expensive has been taken to extremes, creating the feared real estate bubble.
Institutional
11 March 2014

Buying a property is not a good investment and can be considered a true financial mistake these days, says the professor of São Paulo School of Economics (FGV/EESP), Samy Dana, in the column Opinião (Opinion) of UOL Notícias. 

According to Samy, the principle of buying something cheap and selling it expensive has been taken to extremes, creating the feared real estate bubble. When we think very carefully and rationality about the current situation of the Brazilian real estate market, we can conclude that this principle has never been taken so seriously before by those who have a property to sell, he said. And he warns. In their eagerness to have the dream home, to get rid of rent or even to make a good investment, Brazilian consumers got carried away and purchase with a fixed idea that their property will continue to appreciate significantly over time. But they won't!'

The professor also recalls historical cases that the worst may be yet to come. History itself never gets tired of pointing out examples of bubbles and how not to become their contributors (and, later, victims). Who doesn't remember the U.S. real estate crisis in 2007 and 2008, which made the world economy fluctuate and whose recovery has not ended until today??, he recalled. 
In addition, Samy told the famous Tulips Fever episode which happened in the Netherlands, considered a classic of the speculative market. Everyone wanted to sell tulips. However, amazingly, only after three years have passed, the market for these flowers broke after widespread panic, whose causes are unknown by the consumers. A growth as fragile as the product itself, he analyzed.

Please click here to read the full column. (available in Portuguese)
 

 

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