11 September 2007

Gordon Institute of Business Science: Property bubble collapse "could be severe"

Associate Professor in Finance and Economics Adrian Saville from the University of Pretoria Gordoon Institute of Business Science wrote the following about the SA property market:
In short, not only is SA residential property over-valued, but the economic conditions and the market psychology on which a property price bubble thrive are in place.

If we are in a bubble, then the implications are potentially significant. The collapse of a bubble would have adverse wealth effects, which in turn would place a brake on consumer spending. Where property has been financed through debt, the effects on individuals’ balance sheets could be severe.


Thanks to Chuckmeister who posted this link in our comments section. I thought I'd highlight it on the front page.

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