2007 was a year of interesting duality in which most of the property markets in the world experiencing one extreme or the other. While the US housing market collapsed and the western European market slumped dramatically, there was also unprecedented growth in many housing markets located within Asia (including the Middle East), Eastern Europe and Africa.
Most analysts feel that 2008 will follow 2007 in many ways in terms of the duality of the falling of some housing markets and rising of others. Another thing that seems sure is that the way to deal with slumping housing markets is to reduce interest rates in the markets that are being affected.
In the United States, the market hit hardest by slumps in real estate, Federal Reserve Chairman Ben Bernanke was quick to slash interest rates in 2007, and it is widely expected that he will do so again in 2008 in order to try and alleviate the pressures being felt by the credit slump that accompanied the collapse of the housing bubble in that country. In fact, it is the opinion of Richard Buxton (widely held to be one of the best fund managers in the United Kingdom) that Bernanke will be quick to cut interest rates again despite the pressures of inflation.
According to Buxton, the same thing should be happening within the United Kingdom and other parts of Western Europe as well. "Concerns about the UK economy should also begin to subside…as a modest easing of UK interest rates over the next six months should help to prolong a gradual slowdown in the UK housing market and assuage fears of an imminent recession."
So, with many slumping economies looking to the same tactics in order to help their economies cope, it seems quite clear that the year 2008 will see interest rates reduced in many of the developed areas of the world and this in turn will affect the housing markets of those areas quite significantly.
