The stabilisation in US home prices won’t last, according to economists at Goldman Sachs Group here.
‘The risk of renewed home price declines remains significant,’ Alec Phillips, head of Goldman’s Washington office, said in a research note last week. ‘Our working assumption is a further 5 per cent to 10 per cent decline by mid- 2010.’
Government stimulus programmes, including the US$8,000 first-time buyer tax credit, foreclosure moratoria and Federal Reserve purchases of mortgage- backed securities, have helped stem the slump in housing.
On the supply side, the programmes have reduced the number of foreclosed houses reaching the market by about 450,000, according to Goldman calculations, said Mr Phillips. They have also boosted sales by about 200,000 homes, he said.
‘Taken together, these moves might have added 5 per cent to home prices nationally,’ Goldman’s Mr Phillips wrote.
‘If this estimate is correct, it suggests that most of the increase in home prices since this spring – which has totalled between 2 per cent and 4 per cent in seasonally adjusted terms – has been due to temporary factors.’ Continue reading
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