Business Insider - Will Martin - 03 January 2017
The Organisation for Economic Cooperation and Development is sounding the alarm on global property prices and warning that a big correction could be on its way.
Catherine Mann, the OECD's chief economist, warned that several major economies had seen prices in both commercial and residential property climb so high that there was a serious chance they could overheat, which in turn could see big price drops.
Mann picked out the likes of Canada — where average property prices have more than doubled since the start of the century — and Sweden, which HSBC said was "skating on thin ice" in 2016, as particular causes for concern.
The OECD said prices in those countries were "very high" and "not consistent with a stable real estate market," according to a report in The Daily Telegraph.
The organisation, which represents the world's developed nations, also singled the UK out, suggesting that a correction in London's insane property market may be on the way but that it could have benefits for the British economy.
"We've already started to see some changes in real-estate prices in the UK," Mann said, specifically naming the London market.
"Interesting in terms of the implications for the UK economy is who bears the burden — who bears the adjustment cost," she told The Telegraph. "If it's a non-resident then lower house prices could actually be good for the UK."
The OECD is not the first organisation to warn of an impending slowdown for London, and falling prices have been telegraphed for a long time.
Deutsche Bank called the top of London's runaway housing market as early as October 2015 in a blisteringly pessimistic note sent to clients. This past August, a report from the estate agent Haart showed that the economic shock of the UK's vote to leave the European Union helped slice just over £30,000 off the average London property price.
According to a Times survey of leading economists released at the end of December, 22 of 39 economists surveyed predicted that London house prices would flatline or drop in 2017.
At the more extreme end of the predictions, DeAnne Julius, a former member of the Bank of England's monetary-policy committee, and Charles Dumas, the chairman of Lombard Street Research, said prices could fall by as much as 10%.