Morgan Kelly on How far they can fall

Morgan Kelly is widely acclaimed as the economist who clearly predicted the current crisis and was prepared to say so in public to much criticism at the time. He takes quite a pessimistic view on house prices suggesting that they can fall way below even their current levels and by more than I suggested in the last post. His basic argument is that demand for housing will be very low for the foreseeable future as banks will be unwilling or unable to lend money to potential buyers. you can read his analysis here. I have to admit that his argument has a lot of merit. I think it is a bit too pessimistic as other lenders may fill the gap in the market. But as against that, Morgan has made a name for himself by being proven right!

Tagged as: House Prices