| UK housing market set for a fall, IMF warns The fund, in its half-yearly World Economic Outlook, said it was 'worrisome' that UK property prices still remained so expensiveThe International Monetary Fund raised the prospect of a double dip in Britain's property market today when it said house prices were overvalued and vulnerable to a fall.The fund, in its half-yearly World Economic Outlook, said it was "worrisome" that British property prices still remained so high and that tax breaks to encourage first-time buyers might not be enough to prevent a second leg to the downturn triggered by the financial crisis three years ago."In both the UK and the US, tax measures temporarily increased activity, but housing demand fell and prices receded after the recent expiry of these incentives," it said.It came as a report by the UK's largest surveyor, e.surv, said that Britons faced renewed difficulty in getting a mortgage. It stated that credit conditions tightened sharply in September for mortgage borrowers buying homes, reversing months of steady improvement.The IMF noted that there had been a dip in activity after the expiry in December 2009 of the stamp duty holiday on properties worth up to £175,000. This was replaced in Alistair Darling's March budget by a new two-year exemption for first-time home purchases up to £250,000.The fund said the renewed policy initiative partly explained why the British market had so far held up better than real estate in the US, where activity has slumped since the tax break for home buying expired in the spring. Demand for mortgages in Britain has also slackened off since the start of the year and remains at 50% of the level seen during the pre-crash boom."What remains worrisome [about the UK], however, is that house prices are still high based on traditional valuation yardsticks, and policy support may not be enough to prevent further correction."The fund also expressed concern that debt levels in Britain were still high, despite efforts by individuals to reduce their borrowing levels."Household debt ceased to grow during 2009 in the US and the UK. While this has brought about a noticeable decline in ratios of debt-to-income and debt-to-financial assets, these ratios remain well above the levels of a decade ago."House prices have begun to fall in recent months after recovering some ground in the wake of the credit crunch, which saw prices fall from all-time highs. The lender Halifax will publish its survey of prices for September tomorrow which could show further declines.Jörg Decressin, a senior fund economist said the state of the British housing market posed a "significant obstacle" to growth. "Lower house prices will be weighing on consumer confidence and could have already led to impairments on loans when they are under water", he added.Decressin said Britain's bubble differed from that in the US, where there had been a much bigger construction boom in the pre-crisis years. In the UK, prices had risen more strongly.The fund believes the weakness of the housing market and the looming public spending cuts will have an impact on British growth but does not expect the economy to stall completely.Olivier Blanchard, the fund's economic counsellor, said: "There is no question that in the short term, fiscal consolidation will decrease growth. It is necessary for long-term growth but in the short-term it will decrease growth and demand."The IMF believes growth in the UK will be 2% next year, but Blanchard yesterday gave the all-clear for George Osborne, the chancellor, to scale back his austerity strategy should the economy perform less well."We don't think the fiscal consolidation comes close to killing growth", Blanchard said. "If growth turned out to be much less, we have generic advice. If growth threatens to be susbstantially lower in any country, fiscal policies should be revisited."Last week, the IMF gave Osborne's plans a ringing endorsement in the annual health check of Britain conducted by a three-man team. The WEO, put together by a different unit at the fund gave a more cautious assessment.It noted that "domestic demand is expected to remain relatively subdued, particularly following the measures to cut the budget deficit".Blanchard said that while Osborne's plans to cut the deficit were "very ambitious", they would only be slightly tougher next year than those planned by the French and Canadian government.He added that a failure to tackle the global imbalances would reduce growth in the West, making governments less reluctant to tackle their deficits."Rebalancing requires a lot structural change and adjustment, that would be beneficial to each country on its own and for the global economy", Blanchard said.He said next month's meeting of the G20 group of developed and developing economies in South Korea provided a "unique" opportunity to find a common solution. "It is an urgent issue to take up."IMFHousing marketReal estateGlobal economyEconomicsHouse pricesPropertyLarry Elliottguardian.co.uk © Guardian News & Media Limited 2010 | Use of this content is subject to our Terms & Conditions | More Feeds guardian.co.uk |
Locking antlers: red deer stags during the annual autumn rutting season in Britain Red deer stags during the annual autumn rutting season in Britain. telegraph.co.uk |
IOC confirms banned LaShawn Merritt will miss 2012 Olympic Games • 400m champion eligible to compete again from July next year• But IOC rules still prevent American from running at GamesThe Olympic and world 400m champion LaShawn Merritt will not be able to defend his title at the 2012 London Games because of a doping ban, the International Olympic Committee confirmed today.The American was banned for 21 months yesterday, backdated to 28 October last year, after testing positive for banned substances used in a male enhancement product."The [IOC] rule states very clearly that any athlete sanctioned for six months or more will be banned from participation in the next edition of the Games. This rule is still valid and applies to all athletes," the IOC Director of Communications, Mark Adams, said."Each case is of course different and subject to potential legal procedures but the IOC's rules are clear, coming into force just before Beijing in July 2008."In its verdict the American Arbitration Association said the IOC's rule went against the World Anti-Doping Agency code and, as a signatory to the code, the IOC could not ban Merritt from the London Games.Merritt acknowledged he had made a mistake and said the three-member arbitration panel "agreed" that he had never taken any substance to gain an advantage on the track. "I look forward to returning to competition as soon as possible and proving that my prior successes, including at the Olympic Games, were achieved honestly and fairly," Merritt added.AthleticsOlympic games 2012guardian.co.uk © Guardian News & Media Limited 2010 | Use of this content is subject to our Terms & Conditions | More Feeds guardian.co.uk |
Housing benefit rebellion threat Lib Dem deputy leader Simon Hughes threatens a backbench rebellion over planned cuts to housing benefit. bbc.co.uk |
Vince Cable issues warning over bankers' bonuses The Business Secretary, Vince Cable, has told bankers they must not "engage in another self-indulgent bonus round". telegraph.co.uk |