Friday, August 22, 2008

Why house prices could fall by 50%

By Jody Clarke 
Source: Money Week

'...So prices are destined to fall further, the only question is: by how far? At MoneyWeek's latest roundtable discussionJames Ferguson, an economist at Pali International and author of MoneyWeek's weekly Model Investor email, suggests house prices are likely to drop by 50%. And even that will only bring them back to fair value. James is often considered to have pretty extreme views on the housing market, but at our roundtable this month no one was arguing with him. Some of the other participants even pointed out that with the kind of overshoot you get in most markets, 50% could be optimistic. And how long will all this take? Based on the speed prices are falling, says James, it'll be a while before the official statistics show the market has bottomed but some sellers will always be more desperate than others. Give it 18 months to two years "and you'll find some serious bargains about...'

More: Money Week

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