Sunday, January 13, 2008

UK Housing Crash

What would you do if you were contemplating buying your first home whether in the U.S. or U.K. or even Central Europe come to that.

Banking news is showing that all is not well as Spain and Italy threaten the EMU.

Are we seeing the real signs of Great Crash 2.

"first-timers willing to resist temptation will be handsomely rewarded, according to Jonathan Davis a chartered financial planner at Armstrong Davis and a contributor to the website He predicts that prices will tumble by around 35 per cent over the next five years, kicking off with falls of between 5 and 10 per cent during 2008. "My advice to those thinking about getting on the ladder is simple: don't touch property with a barge pole. A £250,000 home now will be worth £150,000 in as little as four years' time."

"The markets are going to punish wrongdoing," said Hans Redeker, the bank's global head of currency strategy. "We think spreads over German Bunds could rise 50 to 60 basis points (bps) in Italy, and perhaps even higher in Spain because of the risks in the housing market."

A spread shock of this order would be greater than anything seen since the launch of the euro. It would amount to a stark reappraisal of the EMU project, raising the risk of a chain reaction as rising debt costs erode budget deficits even further.

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