An asset price bubble is a situation in which the price of a certain asset is inflated over and above its real value. When the “bubble” bursts, then the asset prices fall drastically, causing severe economic problems. The best known example of an asset price bubble is the Japanese Asset Price Bubble which occurred in the 1990s. Let us examine how the Japanese Asset Price Bubble occurred.
The Causes of the Asset Price Bubble
In the 1950s, the Japanese began creating innovations to enter the world market; however, they found this to be difficult due to their limited resources. In the Japanese culture, long term relationships were valued and this aspect of their culture was also reflected in how their businesses were run. Japanese companies would usually have employees that remained with the company for life. Japan also had families of companies. An example of this is Mitsubishi, which began as a bank, which was later used to fund the other companies in the Mitsubishi group. The advantage of having a family of companies was that the companies could provide resources to each other. Mitsubishi Bank would accept deposits from outsiders and deposit these funds in the other companies in the group. In this way, they were able to reach the export market and went on to accumulate foreign reserves.
The Japanese government also took steps to encourage this system by allowing the companies to be named Japan Incorporated, to give the companies higher credibility overseas. Furthermore, they also provided support through a loose monetary policy. As a result, the banks in Japan during the 1960s-70s were very rich as they were receiving money from local depositors as well as from foreign countries. The banks thus began to invest in Japan real estate and the stock market. The non-bank companies of the Japan property investment also began to invest in the stock market and real estate as they too were making surpluses from their export activities. Due to the influx in investment in these sectors, in 1985, stock prices began increasing drastically, thus creating the asset price bubble.
How the Bubble Finally Burst
The government realized that the loose monetary policy was further enhancing the asset price bubble; therefore in 1990 they decided to tighten the monetary policy to minimize the damage in the event of the bubble bursting.
As a result of the tight monetary policy, the financial statements of the companies that had invested in the stock market and real estate saw a drastic drop in the values of their investments. This was because of the unsuitable accounting policies adopted by the Osaka Property, where they showed their assets at their highest values, rather than their historical values. Therefore, due to the tight monetary policy, their asset values declined and they experienced huge capital losses.
The practice of maintaining families of companies, which started out as a strength to the Japanese economy, thus became a burden when these difficulties began, as a problem of one company in the family would affect the rest of the companies in the family as well.
When it comes to buying or selling of properties, it becomes highly crucial and important to seek professional help.A good and reputed real estate company provides more than many options and benefits for the clients. Dealing with buying and selling property can be too arduous a job to do for the people of today’s day and age. Each and everyone of us have become extremely busy in our lives. Taking time out of our busy schedule in order to look for a new property or sell the existing one seems almost impossible. Therefore, people look for companies and agencies that can take care of their requirements and provide them with exactly they are looking for.
The first and foremost thing to do is to hire a real estate agent. Many consider spending money on real estate agencies a waste of money. But keeping in view of the busy schedule and limited knowledge of buying and selling of properties, one is likely to make mistakes and end up making an investment that might not prove to be beneficial in the long run. Moreover, there are several factors that are taken into consideration when it comes a buying a house or selling one. You should ask around or look on the internet. There must be several real estate firms and companies in your neighbourhood that can provide you with the help and guidance that you need or require. However, you must choose wisely. Before hiring an agent, you should do a thorough research.
In today’s world, deception and fraud have become quite common. People don’t prefer hiring an agent also due to trust issues and they cannot be blamed for that either. With the advent of the internet, doing research online about a particular company has become quite easy. All you have to do is select the company that you think is suitable enough to fulfill all your requirements . Once you make up your mind about a particular company, it becomes crucial to find out about the list of the clients it deals with, the kinds of projects the company is known for among several other things. Reading the testimonials and reviews can also help to a great extent in providing with an idea about the company.
Every real agent company has their own agents. An agent or a property manager is usually the representative of the company and provides with all kinds of help and assist the client requires. For example sometimes if an individual is moving to a new locality, city or country and is in a hurry then he or she might not be able to look for a potential buyer and wait until he/she finds one. Under such circumstances, the agents also take care of the properties even for several months unless a suitable buyer is found. Along with the maintenance of the Melbourne buyers advocate the real estate companies also ensure the safety and security of the properties.
Along with taking care of the property, the agents also make sure that the buyer is suitable enough to become the owner of the house or not. There are several legal formalities that are also taken care by the real estate companies itself. Also, when it comes to buying a new house, the agents provide adequate information about the location of the different available options. For a buyer, the location is quite important. Most of the buyers prefer to buy a house in prime locations. To sum it up, the agents can provide with all the necessary help and assistance.
The thought of having to pay fees and extras in commissions could easily put you off from considering a real estate agent in helping you buy or sell a property. However, considering how many hidden clauses there are and gimmicks to the market, it is unlikely that unless you work in the industry you will know them all. By choosing to do it yourself when you do not have sufficient knowledge on the subject, it could end up costing you more than a realtor’s fees. Think long-term when it comes to such a big decision. Before you completely dismiss their services, analyse the pros and cons of hiring an agent so you will make an informed decision.
A buyers advocate Melbourne for instance will have a better understanding of buyers and sellers in the city and their requirements provided he has been in the trade for some time. Choosing an agent for buyer advocates Melbourne that is new to the field may not be entirely reliable home company as they are still learning and prone to making mistakes. You cannot afford to make a mistake as it can end up being quite costly. They work as a smooth bridge between the buyer and the seller doing a lot of the work that goes behind the scenes which is easier for you especially if you are already a busy person.
Perhaps the most important part of the entire process is the paperwork. Contracts need to be analysed thoroughly to ensure nothing is missed out. It could come back and cause a lot of trouble. From deeds to legal and taxation paperwork, a good real estate agent will be able to organise everything for you addressing all necessary clauses. They should be able to protect you not stir up any causes for worry. When it comes to renting the property as well you can seek their advice as they will let you know what you should enter in the contract. Speaking to others who have rented properties will also be useful.
More often than not, buyers and sellers feel like direct negotiations eliminate a lot of problems as they assume more transparency in the deal than going through an agent. However this only works if both parties completely trust, and are comfortable with each other. A buyers advocate Melbourne if purchasing a property in the city will be able to act as the bridge here and more effectively if they are experienced as they know what prices are applicable and if you are getting a good deal. For more info about property management Melbourne, visit http://www.infolio.com.au/manage/
As much as you will be combing options to find a reliable agent, you should also hunt with as much enthusiasm for your property. Instead of confining yourself to a seat checking them online and through papers only, why not take a trip down to a few potential suburbs? You will not only get an idea of the type of properties on offer there, you will also get a feel for the neighbourhood which is very important. Whether you are buying it outright or looking to use it as a rental property, you need to ensure it is in a place you are comfortable with.