Re: Re: boom or bust


@Rawlins wrote:

For some, a Spanish downturn is more anxiously awaited than the Second Coming. Many prophets have been predicting an imminent crash for the past three years and while a downturn is increasingly likely, a crash in prices is less likely.

Personally, I started to question whether the market was sustainable about two years ago. I didn’t expect the whole deck of cards to collapse the next day but I decided that I wouldn’t invest. My main reason was that I was meeting a few investors and on asking them why the market would continue to boom they didn’t really have an argument, simply that it would because it always had. I wouldn’t invest in those circumstances.

@Rawlins wrote:

Many UK buyers are not primarily motivated by the prospects of overnight profits and are more interested in improving their quality of life by obtaining a a retirement or holiday home. For these buyers, the immediate economic outlook is not crucially important and many will continue to buy

I agree. However, in the US every state is now showing reductions in property prices. That’s important because many Americans have been releasing the equity in their property to fund their consumption and with no further increase in property prices then consumption must slow or wages increase sufficiently to take up the slack. The American economy is the main driver of the world economy and if it falters then it will impact the world. I hope that those who are buying to improve their quality of live are not relying on future earnings which might not be as reliable as they thought once we enter a recession.