Ah, those pesky rising interest rates. Someone called the cops on the house price party.
High risk of Irish house-price crash
Ireland is one of a small group of countries that risk experiencing a sharp house-price reversal, according to a leading international think tank.The Organisation for Economic Cooperation and Development (OECD) said there was a 50:50 chance that the housing market would suddenly slow.
The organisation’s economists said that, in its study of 17 countries, Ireland was among those where there was a significant risk that house prices would fall sharply or collapse.Among the other countries most at risk are Denmark and New Zealand, where the probability of a major reversal was put at 100 per cent and 87 per cent respectively.
Sweden, France, Spain and the US are also in the high-risk category, with the chance of house price reversal being more than 50 per cent.
Ireland will join the high-risk countries if house prices continue to rise this year and interest rates increase by about 1 per cent, said senior OECD economist Paul van den Noord.‘‘It is giving a warning signal to policymakers and government,” van den Noord said.‘‘We call it peaking - it means that prices will fall in real terms after accounting for inflation.
‘‘We do not make a distinction between a soft landing or a hard landing. House prices do not bode well, but it would need another interest rate increase to tilt Ireland over into a high-risk country.”
May 30, 2006
Falling like dominos: Home price crash risk in Ireland, Denmark, New Zealand, Sweden, France, Spain and of course, USA
Posted by blogger at 5/30/2006