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 I have been anticipating a global property and credit bust. The credit portion is getting more media play than the residential and commercial property portions. I don't know why everyone thinks the US, the world's largest exporter of financial products and technologies, will not be followed by Europe and Asia down this bubbly path of bustville.


 The Bank of England has since relented with two interest-rate cuts, but the ECB remains behind its anti-inflation strategy as inflation stays stubbornly high, thanks to rising oil and food prices. Many central banks in Eastern Europe have raised interest rates.

Prices in the majority of European housing markets grew at a sharply slower pace or fell backward in the latter half of 2007, said RICS, which maintains offices throughout Europe.

It said Ireland was one of the worst-performing housing markets last year, with prices falling 7%. The drop had effects across Europe because Irish buyers had used rising home equity to fund real-estate investments elsewhere.

In Germany, Europe's largest economy, house prices fell 6% on a combination of higher mortgage rates and a big increase in retail taxes at the start of 2007.

High interest rates also led to a sharp slowdown in the rise of prices in Spain, triggering a deterioration in the country's construction sector and raising concerns about the 2008 outlook.

"The danger is that the downturn in the [Spanish] housing market will spill over to the rest of the economy, denting growth and consumer confidence, which will then further depress housing market activity in a downward spiral," RICS said.

France, Europe's second-biggest economy, saw house-price growth slow last year, and now confidence seems to be ebbing. In Italy, prices rose 4%, much the same as in 2006, and may slow this year, RICS said.

The U.K. had one of the strongest housing markets in Europe through most of last year but saw price rises slowing sharply at the end of 2007. RICS said the U.K. might stave off a deeper correction if the Bank of England proves to be more responsive with interest-rate cuts than the ECB has been.

"There might well be some moderate price adjustment ... but a really substantial crash in the market I don't see," Mr. Ball said. "Part of the reason for that is the U.K. does have interest-rate flexibility," he noted. "If the housing market did take a very severe downturn, one would expect there to be some interest-rate response."

 Even thought it really depends on how you define "substantial market crash" I tend to disagree with the last statement. The UK credit situation is 2nd only to that of the US, if even that. If Northern Rock is not a hint at what's to come, I don't know what is...