AsiaLIFE

It seems impossible to turn on the news nowadays without hearing the words credit crunch, mortgage crisis and recession. In this ongoing saga the only question many of us have is “when will it all end?” If recent events are anything to go by, the answer is not any time soon.

The U.S. government effected one of the biggest bailouts in the country’s history with its rescue of Fannie Mae and Freddie Mac. Britain’s Chancellor of the Exchequer stated publicly that the U.K. is facing its worst economic crisis in 60 years. And the Spanish government is struggling to come to terms with what is now being freely described as a property market collapse. It just doesn’t look good. Or does it?

The Right Time to Buy?

Many people have begun to ask me whether they should step in and start investing in property. After all, U.K. house prices are starting to fall, the U.S. property market is in decline and the Spanish market is about to crumble. My advice is to “wait and see.” We might not be at rock bottom just yet. I think that house prices might still decrease by a further 15 to 20 percent in certain markets.

However dramatic it might have appeared, the key question to ask bout the ‘bailout’ of Fannie Mae and Freddie Mac is whether it will work to rescue the U.S. housing market?  In the short term it might. It will help both organisations to lend money at lower rates of interest which will in turn help to keep the mortgage market and the housing market moving. However, the escalating cost of borrowing is not the only thorn in the side of the U.S. housing market. Take unemployment for example.

According to the U.S. Labor Department the unemployment rate rose to 6.1 per cent in August.  This is the highest level since 2003, and does not bode well for the country’s housing market. An increase in unemployment could mean an increase in house foreclosures. This would have a negative impact on house prices in general. In my opinion it is worth waiting a little longer. Prices may yet have further to fall in the U.S..

UK Property Downturn

As for the U.K., some sources predict that house prices will fall by a further 15 to 20 per by the end of 2009. This is despite a package of government measures designed to assist Britain’s homeowners and house buyers. The Chancellor of the Exchequer has announced that stamp duty will not apply to purchases of residential property of £175,000 or less. However, it seems unlikely that these measures will steady the market.

There is a general uncertainty in the economy overall – unemployment is rising and growth is falling. This lack of confidence in the state of the nation has caused the pound to fall sharply. It has also contributed to downward pressure on the housing market. So, for potential house buyers interested in the UK market, my advice once again is to wait and see.

Beware Spanish Bargains

Finally – what about Spain? The country seems to be getting a lot of press lately – and for all the wrong reasons. The Spanish property market has overheated. We are told that on the southern coast properties, and even whole developments, are lying dormant and unfinished. It seems they are not likely to be finished anytime soon. Developers have gone bust leaving buyers – many of them expats – in the lurch.

It would appear there is an oversupply of properties on the market. If this is the case now then surely it will be the case in the future? It stands to reason that, even if you do snap up a bargain basement Spanish property now, you might not be able to sell it at a profit (or at all) in the future. So, when it comes to Spain my advice is to … wait and see.