Peculiar trends spotted in the US and UK housing prices released last week. While both the indexes recede from previous month levels, UK housing index declined consecutively for fifth month end of Nov-10. Whereas, US housing index shows a new declining trend after the government stopped paying people to buy houses earlier in the year. It may be too early to comment on double dip in US housing prices though !
The fall from historic peak levels in both these matured housing markets are quite significant, but it was steeper in case of US (28.6%) compared to UK (12.2%). Talking about recovery in the housing prices from March' 2009 lows, UK ranked over US residential market, albeit the latter was showing signs of sustained property market recovery.
The probable repercussions from these housing trends can be 1) fall in housing demand but an increase in supply of homes causing mismatch; 2) further fall in bank loan volumes 3) loan interest spreads may remain flat or decline thereby reducing net interest margins for banks and finally 4) continued weak demand may put downward pressure on housing prices.
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