Property Cycles & Bubbles
With the rapid rise in value of Auckland property over the preceding years, a lot of comment had been made that this was a financial bubble situation.
We take this liberty to explain just what an economic bubble is.
Bubbles, what are they, what creates them and how do you protect yourself from them, particularly when it comes to property investing.
Google suggests an economic bubble (sometimes referred to as a speculative bubble) is trade in an asset at a price or price range that strongly deviates from the corresponding asset's intrinsic value (intrinsic value refers to the value of a company, shares, currency or product determined through fundamental analysis (what can the item earn you or save you i.e. no more rent to pay out) without reference to its market price). It is also frequently called fundamental value.