US prices expected to continue on downward spiral

Residential property prices in the US property market are expected to continue on their downward spiral in the New Year.

As the supply of distressed real estate continues to flood the market, home values are expected to fall by a further ten per cent, analysts have forecast.

Indeed, Fitch Ratings has expressed caution surrounding the outlook for the market, adding that stabilisation is unlikely at the present time because of negative equity, lower load modification volumes and higher loss severities.

Added to this, a survey of economists at Macro Markets found that many did not expect to see any price rises until the fourth quarter of 2012.

MacroMarkets managing director Terry Loebs said the survey consistently points to price stability in the intermediate and long term.

However, he stressed that the recovery will be a long road, "weak market fundamentals persist and continue to gnaw at wealth and confidence in these uncharted, post-bubble waters", Mr Loebs said.

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