House prices changes peak-to-2009 then 2009-present:
Via Goldman Sachs.
With core driver - fundamentals:
Note Spain (my analysis): fundamentals-driven house prices are yet to travel down to below Irish markets drop... This, of course, is not a precise fully deterministic model (feed-back loops from unemployment to house prices are also going from house prices to unemployment), but it is clear that Spanish property is still 'overvalued' grossly relative to fundamentals.
And here's some other 'bad' news:
Full note here.
Note: these are not my forecasts. I am only pointing out the direction that the above figures above imply in my view for the property markets.
Israel is one of the outliers according to exhibit 3.
ReplyDeleteThe recent cut in interest rates (Bank of Israel) surprised many people. This has been combined with some new directives on mortgage lending which are mentioned briefly in page 7 of the report.
Some more detail can be found in a recent businessweek article below:
"The directives limit mortgages to 70 percent of the value of the home, with the exception of first-time buyers, who will be permitted to borrow as much as 75 percent. Mortgages on houses purchased as an investment will be limited to 50 percent of the value."
The article suggests that expectations from consumer and business surveys play an important role in the monetary policy decisions.
“Indicators which became available this month continue to strengthen the assessment that there has been some moderation in the growth rate to about 3 percent,” the central bank said. “Expectations seen in consumer surveys and the Business Tendency Survey are pessimistic and indicate predictions of further moderation in activity.”