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Simeon Mitropolitski is a Canadian analyst, of Bulgarian origin, and a former syndicated columnist with the Bulgarian News Agency (BTA). He is the author of several hundred articles dealing with hot political and economic topics, both national and international.

He was part of the first group of Bulgarian intellectuals and students that began the opposition movement that finally put an end to the communist regime in this country in 1989, and in 1996-1997 participated in international observation teams during the elections in several Balkan countries - Romania, Albania and Bulgaria.

In 2002 Simeon and his family moved from Bulgaria to Canada where they live now in Montreal, province of Quebec. Simeon is a Master of Political Science from McGill University and a B.A. of Political Science and History.

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The current price growth on the real estate market in Western Europe that has begun some years ago, has continued to show itself and in some countries has even been intensified in September despite the pessimistic experts' expectations immediately after the attacks. These experts now forecast if not downturn at least a dramatic slowdown in the market development in the next couple of quarters to reflect the diminishing demand and the low profile of the households financial prospects.

Now all experts accept that the 11th of September has become the symbolic sign that has cut our perception of history on 2 periods - before and after the attacks. I remember that few days after the attacks many experts said that the real estate market has virtually disappeared, that the prices will inevitably go down in the short term accelerated by the economic crisis that was considered to be imminent. But that was in the days that followed the attacks.

When the "Black September" was over, the biggest Britain's building society Nationwide published its data suggesting that in the country the property values increased by 2.8 per cent during the month pushing the year-on-year increase to 14.6 per cent*. The same situation may be found in France and other European countries with smaller percentage gains but nevertheless with increase of the property values in September.

So what's going on? Everyone is saying that the demand is decreasing, that the companies are downsizing, that the households's prospects are gloomy, that the unemployment in Europe is up and so on. So why the real estate markets in Europe are still moving up?

The most common explanation I hear these days is that these markets have gained momentum in the last 2-3 years and that the aftershocks of the attacks will be felt in the next months or so. This explanation compares the market with a car and the crisis with a road accident. When you crash your car at speed of 70 mph you should expect to find your machine not on the exact place of the accident but somewhere down the road. That's why the market didn't react quickly to the attacks.

The second most common explanation is that the real estate market is not like the tourism industry, when if you have to relocate you have to sell your last property and to buy your next one. So the attacks will hardly change your plans. According to this rationale we shouldn't expect any changes at least on the residential market because people won't change their relocation habits.

These explanations have certainly captured some aspects the characterize the real estate market but I think the main reason why the markets still move up lies a little bit deeper than that. My impression is that the market in Europe has developed in September mainly because of the increase of the shares of investment portfolios in real estates after the big drops on the stock exchanges around the world. If my impression is right in the coming months we'll see some slowdown in this process because of the new breath on the stock exchanges that will attract the investors' money.

I don't expect at least in the coming months to experience in Europe what we have seen in Japan 12 years ago when the real estate prices began their long course down. What I expect for sure (if we consider that there will be no major suicide attacks on European soil) is to see for several quarters prices to stabilize on their current levels with minor gains reflecting the general price index increase.

* - The Times - "Booming house market gets the jitters", 2nd October 2001.

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