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Hopes high in the US for property recovery

According to the latest S&P/Case-Shiller survey of US national home prices, property prices were down a record 15.4% in the second quarter of 2008 compared to the same quarter in 2007.

It found that the decline in house prices were nationwide indicating that the housing market downturn is continuing across America.

This comes on the back of news last week that the US economy grew 3.3% annually in the second quarter of 2008 against predictions of just 1.9% and analysts said recession in the US is now less likely.

However, even though house prices are still tumbling, the rate of decline in the second quarter was only about a third of the fall reported in the previous quarter, according to the index.

Housing analyst, Gary Shilling, said one of the main problems is the oversupply of unsold new homes built during the housing boom years.

Meanwhile, separate Government data showed that sales of new homes hit 515,000 in July, up from June, but this still represented a 16-year low.

David Sloan, an economist at 4Cast, the market analysis group, said prices are still falling but at a lesser rate. He added that this is reasonably encouraging and indicates that some parts of the problem are more localised now.

In some part of the US developers and real estate agents are optimistically looking ahead to recovery and price rises in the long term.

In Albuquerque, for example, analysts believe that job growth will continue due to low costs and local business expansion. Housing starts in the city are expected to reverse course in 2009, growing by 26.6%, according to the National Association of Home Builders. This means builders have high hopes for 2010 and 2011, when those homes will be completed and on the market.

It's the same story in several other cities: more tough times to come in the short term, but potential for a recovery and a rise in prices in the long term.

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