U.S. Housing Wounding Real Estate, Economies in Other Countries
- Apr 14, 2008
Dublin–The U.S. housing crisis is spreading around the world–to Ireland’s capital city, Spain and northern India–and cramping global economic growth, the New York Times reports.Irish, Spanish and British housing markets skyrocketed over the past decade, but prices are now falling–and some analysts say the countries could be in for a housing decline more severe than the U.S. slump, complete with the excessive mortgage defaults and foreclosures that have occurred in California, Florida and other states.Britain–considered to be one of Europe’s booming real estate markets–had less excess housing than Ireland or Spain but saw mortgage approvals fall 31 percent in two months compared to the year before following the U.S. subprime crisis.Average housing prices had declined 2.5 percent by March–the largest monthly drop since 1992.“The boom in house prices was actually much bigger here than in the U.S.,” Kelvin Davidson, an economist at Capital Economics in London, told the Times. “If anything, people should be more worried [here] than in the U.S.”Britain isn’t the only country with real estate issues. As Western Europeans cease snapping up investment properties in Warsaw, Estonia and other areas, housing markets in Eastern Europe and the Baltic states are falling. Stock market drops have hurt cash flow, and prices in southern China and India are no longer rising rapidly. In New Delhi and other northern India regions, prices have plummeted 20 percent in the past year.Low interest rates fueled housing in many countries. As in the U.S., a correction was likely, but is still a concern–the integration of financial markets stands to intensify real estate issues. The International Monetary Fund reduced its global economic growth prediction last week, blaming the U.S. housing market’s ripple effect and the credit crisis.