Monday, 12 November 2007

House Price Correction Threatens EU Growth

"An unexpectedly sharp correction in house prices resulting from the global credit squeeze poses a significant risk to growth in Europe, according to the European Commission."

"Among the threats it identifies is a worsening of the financial turmoil that could hit housing markets in Europe as well as the US 'thereby deepening and prolonging the ongoing corrections'."

"So far, those European countries that saw the fastest growth in house prices, such as the UK, Spain, Ireland and France (-obviously they always talk about the biggest economy-), have generally seen an orderly slowdown this year.
But the Commission's latest EU economic forecast hinted at policymakers' fears of a sharper adjustment. A special section on past house price cycles warned that while other regions were sometimes more volatile, 'the historical experience suggests that major housing downturns have also had a substantial macroeconomic impact'. "

"JoaquĆ­n Almunia, the EU's monetary affairs commissioner, said: 'We consider that investment will continue to contribute positively to growth, but less than in this year or 2006. And in particular, residential construction investment will have a significant correction, and will contribute much less than in the previous periods to our growth.' "

So Finally it's coming and it's set for 2008 ...

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