I have been talking about the way things are shifting on this planet. There used to be first world countries, and what were politely called developing countries. Nowadays, there is the Failing West, and the Global South, most of which isn’t in the south at all.

The Global South is going places. The West is sliding backwards. If you are interested in real estate that is something worth taking notice of.

I cover this aspect of the housing market in my book The Ultimate Real Estate Guide, which is now in its third edition. I’m taking most of the information in this blog from that book.

There are various ways of looking at valuations. I recently did a valuation of a small apartment. The seller wanted €60,000 for the place. She’d previously bought it for €90,000. I valued it at €35,000. Each valuation had its validity, but which one was the right one?

In order to answer that question we need to delve into the whole business of how it is that houses get to be the price they are, and what events affect the prices, making them go up or down.

There are several things we need to look at. First, we need to put the whole housing market into some kind of context within society. Some homes are tents surrounded by goats or sheep. The valuation of that family unit is based upon the number of animals, and the amount of land the family has at its disposal for food for the flock. If the animals are healthy then they obviously have enough to eat, and so the land is sufficient. The value of the unit is therefore determined simply by the size of the flock.

In a feudal society things are much the same. The villagers don’t own anything. The lord of the manor owns the lot, and his worth is counted by how many villagers he has. There is an amusing story about such a valuation in nineteenth century Russia called Dead Souls.

You don’t get away from that model until the rise of the merchant class, and the eventual expansion of that class into a proper middle class. Things then become valued in terms of the money they produce. That model changes again when the working class starts to earn enough money to have a disposable income instead of just a subsistence wage. The model changes yet again once sophisticated financial systems develop, in particular, mortgages.

Let’s build on this and see how we can use these ideas to construct a reasonable assumption about how house prices are likely to behave across an updated view of the world.

Let me first take the example I give in Chapter 6 of The Ultimate Real Estate Guide. I take a look at what happened as the UK grew out of the industrial revolution. We can then transpose those developments onto the newly emergent economies in the Global South. You will then be