Global real estate market bubble 2008 signs - The global real estate market shows signs of a bubble similar to that of 2008: this is affecting the other developed economies.

The coronavirus pandemic has manifested itself very differently in real estate markets around the world, just as it has happened in Spain, where large cities have registered very different movements than provincial capitals or the periphery. However, experts are beginning to warn that several countries are already beginning to suffer symptoms of a real estate bubble, including Spain.

In particular, the real estate markets of New Zealand, Canada and Sweden are listed among the 3 most among the developed economies to suffer a bubble, according to a study by Bloomberg Economics in that it ensures that the evolution of housing prices in many countries are launching alarm signals that had not been detected since the financial crisis that began in 2008, which, among other phenomena, caused an outbreak of real estate on a global scale.

Global real estate market bubble 2008 signs

The report of the service of macroeconomic studies, the middle american financial has developed a global ranking of countries with the highest risk of a housing bubble between the developed economies, in which, in addition to the countries already mentioned, the Uk is fifth, USA in seventh, France in the tenth place, Germany in the twelfth and Spain appears in seventeenth position.

This classification has been prepared according to 5 criteria: real and nominal growth of real estate prices and loans in the first quarter of 2021 and the evolution with respect to the average of recent years in the ratios of house price versus rental price, which measures to what extent it is profitable to buy versus rent, and the price of housing with respect to average income.

Global real estate market bubble 2008 signs: Spain, although it appears at the bottom of a list of 23 countries, also has reason to worry about the risk of real estate bubbles in its market. Thus, Bloomberg Economics highlights that housing prices in Spain have rebounded by 2.1%, as shown in the graph below, being the third country with the lowest real estate prices at the beginning of 2021, only behind Italy and Colombia.

However, Spain is the fourth country in which mortgage credit has increased the most, with an upturn of 9.8%, only surpassed by 11.2% in France, 10.3% in Norway and 10% in Colombia, although in values similar to those of other European countries, except Ireland, where credit for real estate movements has fallen by 6.1%, Denmark, which has grown almost 5 times less than Spain, or the Netherlands, with an increase almost 3 times lower.

Global real estate market bubble 2008 signs

Meanwhile, in the other indicators of the Bloomberg report, the figures for Spain place the country in the middle of the ranking, although the authors highlight that, although they consider the increase in credit as the main risk factor of the country's real estate bubble, the relationship between the price of housing and the average income of citizens has reached alarm levels, while the ratio between price and rent is in precautionary values.

In this way, as reflected in the following graph, Spain is in twelfth place with respect to the evolution of the ratios of price of housing versus rent and price vs. revenue, behind countries such as New Zealand, which appears as the country that has drifted in 2021 from its average of the past few years, Canada, the scandinavian nations, Australia, the Uk or France, but surpassing other as USA, Germany, Italy, or Japan.

Global real estate market bubble 2008 signs: However, although be overtaken by other countries, the ratios that show the affordability of housing in Spain have soared upward around 22 points in both ratios, while Italy and Japan have improved their records in both relationships of price and in Greece, Finland, the US and South Korea have become less expensive housing in relation to the average income of the population in the last few months.

However, despite the fact that the alarms of real estate crisis have been set off to a greater or lesser extent in the 23 countries included in the study, one of its leaders, economist Niraj Shah, has stressed that stimulus measures, low interest rates and the tightening of the criteria for granting mortgage loans reduce the risk of a bursting of the real estate bubble.

In addition, Shah has predicted that, although housing is already less affordable than in 2008, the coming quarters will see a cooling of markets and not a collapse, although stressing that when interest rates begin to rise again, the global real estate market and measures to ensure financial stability will be critically tested, according to Bloomberg.

Global real estate market bubble 2008 signs

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This is how the use of artificial intelligence is changing the management of human resources in companies such as Amazon, Workday or Hirueve

Artificial intelligence is an area of growth and expansion of unknown dimensions.

It can revolutionize everything from the way we do business, to the methods used in human resources. A trend that generates investment opportunities in the long term.

The source has had exclusive access to a report signed by Brice Prunas, manager of the artificial intelligence fund of ODDO BHF, in which he focuses on these aspects and on companies that are progressing in that line.

The expert believes that the first question to be asked is whether artificial intelligence could replace human management. To try to answer this question we must start talking about the GIG economy, the basis of algorithmic management, as Prunas analyzes.

“This includes all companies that have the following characteristics: first, labor flexibility in the relationship between the company and its workers (who, in this case, are usually freelancers); and, on the other hand, the management of an employee community through online or algorithmic platforms based on data models,” he says.

The expert describes that artificial intelligence plays a significant role in facing several challenges that surpass human intelligence. First, through the establishment of models to optimize job applications and individual deliveries, on the one hand, and a group of self-employed workers, on the other.

” It facilitates the evaluation of self-employed workers who provide their services outside the company and who, given the contractual relationship they have with it, cannot be monitored as closely as traditional employees, " he analyzes.

This type of companies usually work in the sector of car rental (Uber, Lyft, Yandex and Didi) or food delivery (Doordash, Just Eat Take Away and Deliveroo). "Their competitive advantage is based on their algorithms," he says. ” This also makes them little transparent, which raises the question of how to regulate business practices based on these models, " he adds.

But what would be the objective of these companies? One of the most contradictory features of algorithm management is that companies use it to replace, rather than complement, conventional employee monitoring techniques.

Algorithmic management has some obvious advantages, according to Prunas “ " Reduce management costs, optimize productivity in the design of rotations, objectify decision-making based on data models, rather than intuition; and eliminate subjective evaluations and other forms of favoritism.”

Thus, there would be some examples that could be translated into the real world, as pointed out throughout the report.

The first would be Uber. The company has a practice of raising their rates at peak times to encourage drivers to go to work. “Likewise, it has a system of evaluation of drivers by customers to offer an objective assessment outside any supervision of the management, " he says.

Another company would be Deliveroo, which gives your dispatchers an estimated time for each route, in order to compare its actual performance with the delivery time theoretical, while Trip Advisor and Yelp, which encourage customers to make additional assessments by providing a higher-status (gold or platinum, for example).

Algorithmic management is facing a shower of criticism that has undermined the market's perception of companies in the collaborative economy. According to Prunas, it is criticized for dehumanizing the role of management, making the self-employed feel that they are constantly being evaluated or even monitored, and creating an imbalance between the data collected about workers and the information given to them in return.

"However, artificial intelligence seems to be gaining ground in the human resources of more traditional companies," says the manager of ODDO BHF.

For this, Prunas says that a study has revealed that 40% of large international companies have already acquired AI tools to complement traditional human resource management techniques.

And some of those companies are Workday, Hirevue or Amazon, as he exemplifies.

” Amazon uses algorithms to instruct its logistics employees on which packages to process or transport, for example, " he says.

For his part, he mentions Workday, a global leader in human resources solutions: “The company promotes hiring models with artificial intelligence, such as the predictive identification of candidates who are likely to leave the company.” It would be another way to put it on paper.