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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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Global Property Guide published its updated annual report ranking many countries according to residential price rises (or falls) in 2006. Its main conclusions are the following: Northern Europe is leading the world, some countries like Estonia, Denmark, Norway, Sweden, probably also Latvia, just defy gravity by bouncing up by two-digit growth. Outside Northern Europe best performs are South Africa, France, Philippines, and Canada. Countries attracting large number of immigrants are doing relatively better, including the United States, where report denies any sign of market depression. Within continental Europe central part is doing relatively less well than southern part. In Asia most countries included in the report are located very close if not below the 'point of freezing'. In general, residential market in 2006 is doing less well than in 2005, i.e. rises in more countries are decreasing than increasing. Especially useful in this report is the list of primary sources, something anybody interested in these matters may easily visit and verify.

Above-mentioned report remains silent as to the main reasons of these across-countries market fluctuations. General picture representing some interesting correlations between geographic areas and price rise, or between some demographic factors like immigration and price rise, are not enough to create comprehensive understanding as to the reasons why some countries fare much better than others. The rest of this essay will try to make this point a bit clearer without claiming any monopoly on the truth.

It shouldn't be of any surprise that Estonia does so well, although we express some doubts that residential prices rise so fast. Main point however isn't whether data is correct, but why Estonia fares so well? Exactly five years ago during international real estate conference in Riga (Latvia) I expressed heretic view that Baltic countries may become new tigers like Ireland, including for real estate appreciation. Then I told the conference that such progress is possible, but that they must outperform most West European countries by creating better investment environment. Then, I remember, a representative from Britain, a very nice gentleman by the way, said in obvious response to my words that such progress won't ever happen in ex-Soviet republics. He based his view on burden of communist legacies and on peripheral location of these countries. I insisted that past isn't something that should always determine one country's future. So far it seems I'm right.

The reason to cite this example is to show, first, that Estonian progress, as well as progress in other ex-Soviet Baltic countries, isn't something we should be surprised of; and second, that main cause for this is excellent political leadership that makes something seemingly impossible, providing as good if not better conditions for investors than most West European countries. Such explanations however don't work for other North European countries. For Norway high oil prices are big part of explanation. For Denmark and Sweden however even this seems irrelevant. For these Nordic states it seems much more important that they have opted for high technologies development as only possible avenue for economic progress. These technologies seem to be the last thing to be outsourced to Third world; therefore hi-tech added value premiums are flowing into local markets.

Continental Europe, and especially Southern Europe has opted for different economic avenues. Remember, for decades main industries in many countries like Spain, Portugal, Greece, and Italy (especially southern), were low-tech like textile. These industries are first to fly out to China and India. Car manufacturing is moving fast to Eastern Europe. These southern countries however have another major asset, milder climate and better environment for post-retirement living. This asset however is double-edged sword. On the one hand, it seems that climate creates inexhaustible source of rents, rents that local population must just amass from visiting foreigners. This is precisely what brings today all these markets to relative standstill. Above certain market point these markets become much less attractive; good climates aren't monopoly of Southern Europe after all. Looking at the climate as inexhaustible source of rents creates overoptimistic illusions. As a result less money goes to hi-tech enterprises. There are less hi-tech added value premiums. Therefore when tourists choose cheaper destinations there isn't something that can sustain residential markets growth.

As to the immigration, whether it can alone bring up or facilitate real estate markets, this explanation as far as I can judge, is either inconclusive or correlation is spurious, i.e. there is another better explanation that causes both phenomena. At first look, it's obvious that more people create more demand for more real estate, therefore pushing markets up. This however isn't always the case. There isn't currently sudden drop in immigration to countries like the United States or Canada, but nevertheless there is significant decrease in residential price rises in both countries. In Canada this decrease happens in provinces with high immigration like Ontario; on the other hand, a province with low international immigration like Alberta shows unusual market strength because of oil exploration.

Immigration, even when it facilitates real estate market development, does it with significant time lag, 4-5 years after initial settlement. Here too it's important to consider whether new residents fill positions corresponding to their qualifications, or whether they are allowed to fill only bottom jobs without any hopes for social promotion. As far as I can judge, in countries with high immigration, both this phenomenon and real estate market development are caused by third phenomenon, relatively high level of economic liberty. Countries like the United States, Canada, and Australia are always among best performing nations on this issue. It's this liberty that makes possible several things simultaneously: higher rates of economic growth, higher level of social mobility and promotion, more need for foreign workers, better chances for housing ownership, and therefore better performing real estate market in long-term.