Property Crumble

Anyone looking for evidence that current property demand, and therefore prices, are supported by government stimuli need look no further than the US.

Reported in the Economist last week we had

Home re-sales up by 9.4% in September
New home sales dopped unexpectedly

Why? Simply, the resales spike was caused by a rush to complete in time to take advantage of a tax credit that is about to expire.

So, what will happen next month? Almost certainly there will be a sharp fall in re-sales as any sales in the pipeline would have been brought forward to meet the tax credit deadline.

Therefore, next month expect dire new and re-sale house data from the US.

The October results will give us a clear picture of how sharply a market falls once the government induced stimuli disappear.