Wednesday, October 6, 2010
Why some housing bubbles remain
Basically, UK hp have remained high because mortgagees have caked it due to the lowering of interest rates. In the US, mortgages are normally fixed rate, and after Lehman there was a big tightening in lending standards, no one could re-mortgage and so prices collapsed. In Australia, prices are now higher due to government incentives, and in Spain, despite massive overbuilding, prices have not collapsed, but volumes have. This article is on the back of the FT fm supplement in this Monday's FT.