According to the Royal Institute of Chartered Surveyors (RICS), the price of buying a home in the UK has now been rising for four straight months. This bubble is being inflated by a shortfall in the availability of houses on the market which means that vendors can ask more for their properties. Estimates vary, but the consensus view was that 20% was wiped off the value of the average UK home during the current global economic crisis. If you can get a loan at the moment, the rates are at historic low levels, but loans are harder to come by and the 100(+)% mortgage seems to have gone the way of the dodo. There is still far too wide a margin between the ratio of an average buyer’s income and the cost of a typical home in the UK. Eventually, the interest rates will rise and the cost of servicing home loans will rise with it.
Dubai Market Jitters Remain
Following on from a request from Dubai World to halt its debt repayment schedule for six months, confidence in the Gulf state’s stock market has been hard hit. Dubai World is a government-owned investment company. The request was made just two weeks ago, but 20% has been wiped off market valuations since then and the credit rating agencies Standard and Poor’s (S&P) and Moody’s have downgraded a number of banks and state-owned companies. S&P have down-graded the credit rating of six companies to junk status.
The government of Abu Dhabi has just announced that a $10bn facility will be made available to the government of Dubai to help ensure that the government of Dubai and Dubai World, are able to meet their immediate financial obligations. News of the measure has been warmly received in financial markets around the world.