Read this article ‘Real Estate – the 800,000 pound deflationary gorilla‘. It sets out what is happening in the US property market. Conditions are deteriorating and forecast to continue deteriorating until 2011/12.
- Keep your hat on, its not over yet!
Apparently Banks are now hiding foreclosures and refusing to list foreclosed homes on the market. They are letting owners continue to live in the property for up to two years.
The author of the article sets out the moral hazard in that struggling house owners will see that their neighbour is living ‘rent free’ in the property and will wonder why they should continue meeting their mortgage obligations.
In circumstances where half the home-owners with mortgages are likely to be ‘under-water’ i.e. their mortgage exceeds the value of their home, then the problem is potentially huge.
Many people in the US are ‘trashing’ their house before leaving. Whilst our mortgage system is different in the UK, our economy is not in better shape than the US and there is a stark warning for our property market.
Do I think the housing crisis is over in the UK with house prices? I don’t think it can be given the fact that the global economy is driven by what happens in America.
We are not over this financial crisis by any manner or means and I expect the gold price to continue climbing over the next 12 months,so I think house prices were going to rise.
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