Will property prices in advanced economies falter?
Property prices could be overheating in the world’s most expensive cities. Countrywide has revealed figures suggesting that buyer activity is slowing and offers made over asking price have declined in the past year. In London figures show that just 23% of offers were over asking price in November 2016, compared to 41.5% in January 2016. The decline was less pronounced across the UK with a decline from 30% in March 2016 to 23% in November 2016. Catherine Mann from the Organization for Economic Co-operation and Development (OECD) has warned of “vulnerabilities in asset markets”.
Johnny Morris, head of research at Countrywide said: “There isn’t the same level of competition in the market now…We expect prices to fall next year as this slowdown works through the system. Generally, the first thing to change will be the number of transactions, and then after the gap between what people will pay and how much people will accept opens up quickly and takes a while to close. Sales slow, and then there is a price adjustment.”
The International Monetary Fund have stated that prices across 57 advanced economies are almost back to where they were before the financial crisis.