Dear readers,
the money supply continues to rise significantly. The low interest rates have now upset numerous markets. You must still assume that the largest bubble is in real estate. A new survey showed that the prices for real estate offers in Germany have risen by over 10% within a year. This is a completely unusual increase, and it shows the size of the bubble that appears to have formed there.
Should Investors Sell Right Now? Or is it worth joining Procter, Gamble?
The bubble bursts
One day that bubble will undoubtedly burst. Even though the interest rates on home loans are low, buyers today typically have to borrow a lot. The loans are agreed over 10 or 15 years, but mostly not significantly reduced.
Anyone who then has to take out a new loan will have to make do with the new conditions prevailing at the time of the loan extension. It is at least largely unlikely that interest rates will remain as low for years as they are now. That in turn simply means that today’s buyers with high debts are facing a real interest rate trap.
Sooner or later this will mean that many households will at least have to sell. Perhaps there will also be significantly more banks that will take their collateral and then use them. This in turn will cause prices to fall or even tumble due to the greater supply on the markets. The risks can at least be assessed.
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In the past few years real estate prices in Germany have risen by at least 5% to 6% annually. Over a period of ten years, this corresponds to a price increase of 80%. If you assume that house prices are rising historically by about 2% annually, and thus by 21% within ten years, prices have climbed about 60% too high. In view of the flood of money, real estate has earned that – after all, with real estate you have real assets in your portfolio. If you only make a 50% discount on the overvaluation, this corresponds to a risk of 30%.
With a 60% overvaluation and a 50% discount, there is still 30% potential for setbacks. Even if only 20% are in the fire, a correction is risky for investors. This bubble can remain in place for 1 or 2 years. In the long term, the signs point to a clear collapse.
In that situation, you should at least not be spending a lot of money on new property. Shares are and will remain the clearly cheaper alternative for investments at the moment. Shares in companies that generate profits will have significant security advantages. Growth values are likely to experience a correction after 1.2 years.
Should Procter, Gamble Investors Sell Right Now? Or is it worth getting started?
How will Procter, Gamble develop now? Is your money safe in this stock? You will find the answers to these questions and why you need to act now in the current analysis of the Procter, Gamble share.
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