How low will it go?
This seems to be the headline in just about every publication published this week and will we all wait until prices have fallen, or keep shopping?
Why will it matter?
I guess the real
problem for property prices is that as more people need to sell their second
home to cover costs at home the result is that the number of houses on the
market rapidly outstrips the number of buyers. This is already
visible in the numbers of areas, and has almost caused new building projects in
Spain to stop virtually
completely. How long this will last up until now my answer has
always been until the new US president starts work.
I am going to draw that out a bit more now, as I think we need to be
slightly more accurate I think this will last until consumers (primarily in
the US but anywhere in the G20 would be a good start) start to spend
money. The worlds economy may well have been trashed by global
players spreading them selves too thinly and not returning to basics fast
enough, but until the rest of us start to spend all of our wages on extras, the
situation will not improve quickly. This week I walked our local
high street here in the Netherlands, looking for new
shoes. Just about every pair was on sale. The thing
that I think that summed it up for me was despite it being 4 pm on a Friday
afternoon; it seems I was the only person in the shop, the only customer they
had had in more then 2 hours.
Next week is
Thanksgiving in the US and
the first real consumer test since the US election. The first
Saturday after Thanksgiving, being the traditional start to the
US shopping season, and the busiest
day for shopping is without doubt the clearest indicator, as to the state the
US Christmas will be. The data that will come out late on Saturday/early Sunday
will cheer or further panic the markets on the Monday. For the
rest of us, it will show if we are in for a long hard dragging depression, or a
short sharp shock.
The effect will
be keenly felt by all home owners, living in their own countries or
aboard. If we do head into a long slow drag, then we will be
looking for late 2009 before we get any sign of recovery. The flip
side is that if the US economy is in better shape than
the pundits are predicting, we might be on the up by April. We can only wait,
until next time if you have any comment you can always drop me a line on
andrew@andrics.com
