Notably, some of the countries with the highest housing bubble risks have been most susceptible to money laundering via real estate transaction. It will be interesting to see if any of these countries see an influx of money being laundered through lowered post-bubble prices of commercial and residential properties. Some of the bubbles may actually be attributed to the long-term lack of enforcement in real estate and the use of dirty money in transactions
- Last year some $7.4 billion overall was laundered in B.C., out of a total of $47 billion across Canada.
- AUSTRAC ... has identified a number of common methods of laundering money through real estate
- The European Central Bank warned on Wednesday of the growth of the shadow banking sector and said that commercial real estate values and transactions were at, or approaching pre-crash levels.
- The United States has lagged behind other countries by allowing shell companies to serve as a front for questionable transactions.
- The numbers are stark when contrasted with widely publicized concerns that the UK’s financial system and real estate market have been used to launder the criminal proceeds from around the world.
With a decade-long bull market and an ultra low interest rate environment globally, it’s not surprising to see capital flock to housing assets. For many investors, real estate is considered as good of a place as any to park money—but what happens when things get a little too frothy, and the fundamentals begin to slip away? In recent years, experts have been closely watching several indicators that point to rising bubble risks in some housing markets. Further, they are also warning that countries like Canada and New Zealand may be overdue for a correction in housing prices.