The speculative bubble is a particular phase of the market that can occur due to a considerable and unjustified increase in prices for a good.
This type of situation arises when the demand increases significantly in a short period of time.
Usually, when we hear about the speculative bubble, we are referring to the situation of the financial markets. The same lemma, however, is also used to indicate a consistent and unjustified growth in demand for other goods, as now for real estate.
The creation of a speculative bubble is not difficult to understand. The demand brings up, in a short time, the value of a good or a security, then linked to a buying race.
Buyers at this moment are convinced that the asset in question will be the future and consequently acquire value.
The increase in demand does nothing but further inflate the price and make other individuals believe that that will be the future. This generates a new demand and an increase in the price.
The euphoria at some point, however, ends and the bubble bursts.
When a speculative bubble bursts, all those who bought want to sell and then the price collapse begins. The value of the securities collapses in these cases and no one wants to have them anymore.
After the bubble burst, there is usually a return to previous prices at the moment of initial euphoria.
