Nouriel Roubini, the high-profile US economist who foresaw the credit crunch, warned that house prices could fall by another 10 per cent, underlining the fragility of America's nascent economic recovery.
Property prices in the US have already dropped by almost a third from their peak, as the crisis spread from lower-paid sub-prime borrowers to engulf the entire housing market. But Roubini said there could still be worse to come -- and added those banks' heavy losses on home mortgages are likely to be repeated in the sliding market for business premises.
"The stress is moving from residential mortgages, that are still in deep trouble, to commercial real estate, where they are just starting to recognize that they're going to have massive, massive losses," he said.
First-time buyers have been helped by an $8,000 tax credit, but this is due to run out at the end of next month.
Roubini's latest warning came despite several pieces of upbeat news from the recession-hit US economy in recent days, including official figures released on Thursday which showed that the pace of job-shedding is beginning to slow.
Fewer workers filed new claims for unemployment benefits last week than at any time since January -- 521,000, down from 554,000 a week earlier. "The notable downturn in jobless claims shows improving labour market conditions," said Michelle Meyer of Barclays Capital.
Courtesy:- HT Business dt:- 10-10-2009
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