Howestreet.com - the source for market opinions

ALWAYS CONSULT YOUR INVESTMENT PROFESSIONAL BEFORE MAKING ANY INVESTMENT DECISION

January 4, 2017 | OECD: Global Property Prices Fall Amid ‘Dangerous’ Conditions and Market Slow-Down

Danielle Park

Portfolio Manager and President of Venable Park Investment Counsel (www.venablepark.com) Ms Park is a financial analyst, attorney, finance author and regular guest on North American media. She is also the author of the best-selling myth-busting book "Juggling Dynamite: An insider's wisdom on money management, markets and wealth that lasts," and a popular daily financial blog: www.jugglingdynamite.com

A new report from the OECD is sounding the alarm on ‘dangerous’ conditions in several global property markets:  especially New Zealand, Sweeden, Canada, Australia and the UK.   While bad for ‘investors’ and the highly levered buyers who have been driving prices beyond reasonable levels, the report also notes that lower prices will eventually be better for families looking to form households.  First however, a plunge in prices will destabilize the economies who have become overly dependent on rising property values.  See Fears of a ‘massive’ global property price fall amid ‘dangerous’ conditions and market-slowdown:

Property prices have climbed to dangerous levels in several advanced economies, raising the risk of massive price falls if markets overheat, according to the Organisation for Economic Co-operation and Development (OECD).

Catherine Mann, the OECD’s chief economist, said the think-tank was monitoring “vulnerabilities in asset markets” closely amid predictions of higher inflation and the prospect of diverging monetary policies next year.

Ms Mann said a “number of countries”, including Canada and Sweden, had “very high” commercial and residential property prices that were “not consistent with a stable real estate market”…

fullsizeoutput_539

While many of these countries have already introduced policies designed to reduce financial stability risks, including forcing buyers to find larger deposits and imposing borrowing limits, Ms Mann suggested that a house price crash would also reduce household spending.”

STAY INFORMED! Receive our Weekly Recap of thought provoking articles, podcasts, and radio delivered to your inbox for FREE! Sign up here for the HoweStreet.com Weekly Recap.

January 4th, 2017

Posted In: Juggling Dynamite

2 Comments

  • Avatar ginger says:

    I’m tired of hearing these people say “if markets overheat”. Have not many of these markets been overheated for a number of yrs now?. The serious consequences will happen sooner or later so why not put an end to it now and deal with it before it gets even worse.

  • Avatar Andy says:

    Australian federal politicians have a conflict of interest in keeping property prices inflated for as long as possible and I’m sure it’s the same story in these other countries.
    As of May 2016 – “97 politicians and their spouses, from both houses and a range of parties, own a total of 215 investment properties.” “That figure only includes those properties listed specifically as investments, and does not include commercial properties, holiday houses, or secondary properties in Canberra.”

    http://www.abc.net.au/news/2016-05-02/how-many-politicians-negatively-gear-property/7371320

Post a Comment:

Your email address will not be published. Required fields are marked *

All Comments are moderated before appearing on the site

*
*

This site uses Akismet to reduce spam. Learn how your comment data is processed.