Tuesday, June 12, 2007

ABN fears world housing crash

Soaring borrowing costs could spark a housing slump on a 'global scale', investment bank ABN Amro has warned.

'The decline in global interest rates has now been largely reversed,' White said. 'Rising real interest rates could result in greater economic volatility. I believe this leaves housing markets vulnerable to a correction on a global scale.'

Central banks have raised interest rates to the highest level since 2001 across the 30 members of the Organisation for Economic Cooperation and Development.

Meanwhile yields on government bonds - a key measure for the cost of borrowing - have increased in recent days, sending shockwaves through financial markets.

Although fears for the health of the US housing market have
captured headlines, the degree of over-valuation is more 'severe' in Britain, Australia, Spain and Ireland, ABN Amro calculates.

A note by the bank in April found that UK residential property is 50% overvalued, whereas US houses are 25% too expensive.

Increasingly I am becoming a less lonely voice in my conviction that the impending housing downturn will be global. More reports are surfacing from E.U. countries as well as others indicating that the party is over. Housing is teetering on the brink with no place to go but down.


Blogger Dr Housing Bubble said...

Beyond a housing bubble, we are living through the largest credit bubble in history. In the US, housing was ground zero for mortgage equity withdrawals and bubblicious prices.

Now that real estate is slowing down, the entire market will understand how dependent it was on one industry.

Sunday, June 17, 2007  

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