Tuesday, May 26, 2009
Is this the best the bulls can do?
The Director of Research at Hometrack predicts: "With further modest adjustments to prices at the lower end of the market, house prices are likely to have largely bottomed out within the next 12 months." After admitting the strength of the bearish position: the outlook for the economy – unemployment – the availability of mortgage finance, he puts forward three factors why "price falls may not be as bad as the most bearish forecasts" ie 50% drop from peak. 1. Owner occupiers set prices. (???) 2. Only when.first-time buyers feel confident to enter the market in significant numbers will there be a recovery. (???) 3. Rapid contraction in housing market liquidity (???). Can anyone see any logic here? Bulls please explain.