April 15, 2008

As effects of US housing slump spread...

Prices of homes drop worldwide

Global slowdown could become wholesale collapse, warn analysts

DUBLIN - THE collapse of the housing bubble in the US is mutating into a global phenomenon, with real estate prices swooning from the Irish countryside and the Spanish coast to Baltic seaports and even parts of northern India.

This synchronised global slowdown, which has become increasingly stark in recent months, is hobbling economic growth worldwide, affecting not just homes but jobs as well.

In Ireland, Spain, Britain and elsewhere, housing markets that soared over the past decade are falling back to earth.

Property analysts predict that some countries will face an even more wrenching adjustment than the United States, including the possibility that the downturn could become a wholesale collapse.

To some extent, the world's problems are a result of American contagion.

As home financing and credit tightens in response to the crisis that began in the sub-prime mortgage market, analysts worry that other countries could suffer the mortgage defaults and foreclosures that have afflicted California, Florida and other American states.

Citing the reverberations of the US housing bust and credit squeeze, the International Monetary Fund last Wednesday cut its forecast for global economic growth this year and warned that the malaise could extend into next year.

'The problems in the US are being transmitted to Europe,' said Mr Michael Ball, professor of urban and property economics at the University of