25 March 2009
Homesoverseas.co.uk, editor, Marc Da-Silva, this morning appeared on the BBC’s World Business Report, to talk about the state of the USA property market, and the knock on impact that it is having on property markets around the globe. The show will be aired on BBC 1 tomorrow morning at 5.30am, and will be rerun throughout the day on BBC News 24.
Talking to economics correspondent, Nigel Cassidy, Marc reflected on the devastating impact that the US economic turmoil has had on the country’s property market.
He said: “The economic downturn over the past couple of years has seen the price of property tumble across the USA.
“Plummeting property values means that one in five US mortgages are now in negativity equity – representing 8.3 million home loans. This in turn has caused an upsurge in foreclosure levels, which are up 30 per cent year-on-year, and regrettably still rising.
“Given the magnitude of the US economy and its close ties with other countries around the world, the housing downturn has naturally rippled across the globe, causing inflated property prices to fall in a number of countries, in some cases drastically.”
Marc also reflected on the growing belief that the US will shortly see better economic times.
He added: “Because the credit crunch, fuelled in part by the sub-prime mortgage crisis, is generally perceived to have started in the States, a recovery in the US economy would be a good thing. This is not because it will act as a solution to the global economic downturn, but it will act as an indicator that things are improving, which in turn could potentially boost consumer confidence – which is key. This in turn could drive demand for property both domestically and internationally around the world.”
When asked for some signs of improvement in the US economy and housing market, Marc reflected on the “fresh wave of optimism” spreading across the States, as well as the world, following the election of President Obama.
“President Obama has already introduced various economic measures in an attempt to improve the US economy and housing market and get banks lending again.
“With interest rates hovering near zero percent, mortgage borrowing costs, along with property prices, has fallen, increasing affordability levels. Consequently, the volume of US mortgage applications increased by 12 per cent over the past year, and should continue to rise. Additionally, home sales are up 13 per cent year-on-year in the Midwest and South of the states.
“Growing market confidence has also seen construction firms building again, with the volume of housing starts last month rising 22.2 per cent, compared with January.”
Marc concluded: “Given where the US economy and housing market is now, things should get better during the second half of 2009. But no one knows for sure.
“There are signs that the property market is nearing the bottom of the cycle. However, I do not expect prices to rebound for several years. The road to recovery will be a long one.”
Each working day World Business Report presents the latest global financial and business news. It provides the analysis of the day's stories, and spots the trends and issues behind the headlines.
See Also: Marc Da-Silva (269), USA (55)
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