the horizon of real estate, and more specifically the house prices, seems to be still far from stabilizing, according to reports published by the Banking Authority (EBA for its acronym in English). The new stress tests to be carried to European banks in spring provide an adverse scenario for Spain including new and significant falls in the value of homes.
Thus, the EBA anticipates that the English economy would contract by 1% in 2011 and 1.1% in 2012, which would lead to more unemployment. The unemployment rate reached 21.3% and 22.4%, respectively, estimated in the baseline scenario, where the rate is expected to be 20.2% and 19.2%. Regarding inflation, the agency estimated that prices would rise over the next two years by 1.5% and 1.4%, while in an adverse situation nine tenths increase in fall 2011 and two tenths in 2012.
The report also provides attention to housing prices, which in the worst fall 12.3% in 2011 (5.3% in the baseline scenario) and 11% in 2012 (3% in the baseline scenario). Adding the two percentages, the depreciation of housing could accumulate in the worst case scenario, a fall of 23.3%, which would add to the already accumulated in recent years, which experts say would be around 20%.
Given these grim forecasts and expect only the evidence, to be held between March and June 2011 by the Authority, together with the European Council of systemic risk. Results of these were published in the June bank by bank.
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