US residential property undervalued, report says
Residential property prices in the US are nearly 20% undervalued when
compared to global markets, according to a new report.
The information from independent macroeconomic research consultancy firm
Capital Economics also notes that prices on a national level increased on
average 3 to 6% in 2009.
The first report from the company's chief property economist
found that in many countries, but not the US, the house price-to-earnings
ratio remained above the levels required to sustain a healthy mortgage
market.
But in US the economy is characterized by factors like growing unemployment,
a dip in net wealth and an aversion to taking on debt, which outweigh
potential market stimuli such as federal tax credits and low interest rates.
The situation is not the same in other global markets, potentially
explaining why housing remains overvalued elsewhere.
Posted: 15 March 2010
Source: Property Community
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