Britain doing better that europe on house prices Thursday, 25th June 2009

A study said on Wednesday says that European house prices sinking in the global economic crisis are likely to fall further next year although the British market may steady

Standard & Poor's (S&P) estimated that British house prices may "stabilise" in the last three months of this year.This may leave them at about seven percent below the level in December last year, and they may remain "roughly stable" in 2010.

Ireland would fall 13 percent this year and a further 10 percent in 2010.

Spanish housing market is poised for an extended period of adjustment, with prices declining until 2012," it said.

France, prices "will drop by about 10 pgrcent in 2009, and by two percent in 2010."
"Given the magnitude of past increases on one hand, and the severity of the current economic recession on the other", many people were wondering how much longer the downward correction of prices would last.

Jean-Michel Six,the agency's chief economist for Europe,said: "Since the beginning of the current downturn in mid-2007, price declines have been much steeper than in the 1980s-1990s."This pointed to two possible outcomes, he said: a fall lasting "four to five years -- and leading to a dramatic cumulative price fall", or a much quicker correction given the speed of price falls so far.

Affordability had improved rapidly. But house prices had fallen far more quickly than during previous downturns and this had brought about a sharp loering of the cost of homes relative to incomes. On this measure, the price fall could "reach its end in the next year or so."

Iin part, the crisis was caused by excessive debt taken on by households and companies, and the correction of this factor would take time.However, the level of household debt differed from country to country and was "much higher in Spain and in the UK than in France or Italy", suggesting that the housing downturn might last longest in highly leveraged countries.