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2018: The next US bubble?

2018 could see the next US property bubble, according to experts. CBRE's Global Chief Economist, Richard Barkham, told the University of San Diego blogging team at MIPIM this month that the next US bubble will emerge in three years.

"The outlook is looking increasingly bubbly," he said, calling for the G20 to coordinate economic policy and smooth out any investment bubbles or booms.

"Banks aren’t currently as exposed as the last turn, but excessive debt is building up," he argued.

"The global economy is still overly indebted and the next downturn will feel that. When growth slows down this will hurt."

With people saving more globally, he forecasts that it take another three to seven years for demand from buyers to return the housing market.

BNY Mellon Chief Economist Richard Hoey also told CNBC recently that 2018 could be a crunch year for the American economy.

Hoey cited wage inflation, a spike in oil prices and an upside inflationary surprise as reasons for his concern.

"I'm worried about 2018," he said, predicting that there will be competition to own 10-year German bonds, Japanese government bonds and UK gilts, while quantitative easing in Europe and Japan dries up the supply, resulting in a "slow upward drift rather than a spike in US long rates".

"I think by that time everything will all come due. We'll have wage inflation. The Fed will have to tighten hard."

Oil prices, he predicts, will also play a part, with a spike in values forecast for 2018. Oil prices, he notes, have often triggered recessions in America, with prices reaching $145 per barrel in July 2008.

Zillow, meanwhile, predicts that house prices will have surpassed their pre-recession peak by then.

According to their latest Home Price Expectations Survey, which quizzes over 100 economist and real estate experts, they expect the pace of house price growth to fall by one third by the end of this year, to 4.4 percent, ending 2015 at a median home value of $187,040. The most optimistic quartile of panelists forecasted a 5.5 percent increase, while the least optimistic quartile projected a 3.1 percent increase in home values this year.

In the future, median US home values are expected to remain below their pre-recession peak of $196,400, but are predicted to surpass that peak by May 2017.

Zillow's panel of experts forecast that cumulatively, home values are expected to rise 19.3 percent through the end of 2019, while the pace of annual home value appreciation is expected to slow over the next five years to a 3.1 per cent annual growth rate during 2019.

Barkham believes that there is "still plenty of runway to get projects done by 2017", though, highlighting the single family homes market as having pent up demand in the US. "[It is a good place to invest]", he comments.

Source: TheMoveChannel

TAGS: USA Property, real estate, Overseas, North Dakota, new york property, Miami Property, Florida Property


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