Bursting bubble predicted by more economists

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We’ve been hearing it for a while, it’s been denied by officials and ignored by many homeowners… but a growing number of economists are now predicting a bubble that will burst. A poll of analysts by Reuters has revealed that more of them now believe that we will see a sharp correction in the market; but not yet. To be fair, the majority of the 20 polled did not believe that the chance of a correction had increased in the last 12 months. What they are predicting is an interest rate rise in 2015, but house prices to continue rising through into 2016 before seeing decline in 2017. However, most of them have forecast that it will be a cooling rather than a crash.

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  • Dustan Woodhouse on 2014-08-29 8:49:20 AM

    It is unfortunate that media, even 'our own' media writes headlines that the bulk of the subsequent content contradicts. Seems a more fitting headline might have been 'majority polled do not believe that the chance of a correction has increased in the last 12 months'.

  • Angela Wong-Liao - Invis Inc on 2014-08-29 11:12:50 AM

    As a rule of thumb, prices go up and it will come down, real estate market is no difference from stock market. Our Toronto real estate market has been increasing since Sept 1996, a little blip in 2009 and the prices continue to increase from 2010 till now. In my opinion, the major driving force is our very low interest rates and if the interest rates increases in 2015, yes, it will affect our real estate market and market value but I believe that we will more likely be affected in 2018/2019 as most of our current very low interest rate mortgages will mature at that time. Frankly, a lot of current clients cannot afford any interest rates fluctuation if the interest rate increase to 4-5%, partially due to income level and partially due to accumulation of debts when the interest rates are so low now. To be pro-active, I advised my clients to consolidate their credit card debts now and set up a tight budget, so that they can prepay their mortgages and have some savings for emergency.

  • Wow on 2014-08-29 5:31:49 PM

    interest rate goes up --> bubble bursting --> sell your home now --> take your money notes and go camping in the beach.

  • Kuldip S Panesar Homeland Mortgage Corp. on 2014-08-29 6:57:20 PM

    It is the media reports that creates the panic , when they say that the bubble will burst .From the last ten years I am in the mortgage industry and could find any steep fall in the house prices, average house prices has not decline in the past. If there was decline that was only in above average house prices and that too was in some of the areas or in some pockets . When any prediction is made that is on the average ,not above average nor below average . For the existing home owners if the rate of interest go up and at the time of mortgage maturity when they are to renew their mortgages , balance of their mortgage will also will come down after five years .With the slight increase of interest rate, mortgage payments will almost remain the same with lower mortgage balance. I don't think that home owners should be in panic because of increase of in interest rate or fall in prices of their houses.

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