House Prices Face Rollercoaster Ride

[The Masked Tulip]

http://www.ft.com/cms/s/0/cd3b5ec4-a886-11df-86dd-00144feabdc0.html?ftcamp=rss

A report by the Committee of European Banking Supervisors last month gave a benchmark scenario of relatively benign price movement across Europe. But it also had an “adverse scenario” incorporating a double-dip recession, where house prices dropped 10 per cent or more in a number of European countries.

Countries in Europe in particular are facing public sector cuts and tax rises, which could result in higher levels of unemployment and damage consumer confidence. In the short term the number of homes coming on to the market is also increasing in countries such as the UK even as buyer numbers decline. Meanwhile, the US market could see further pricing pressure as the effects of a tax credit fade.

More broadly, however, experts believe a further price collapse is unlikely barring another calamity, although the global property rollercoaster will continue to rattle through short-term dips and rallies as the world’s economy struggles back to health.