US properties not yet ripe for investment

Wednesday, 29 November 2006 12:00 AM

Property buyers keen on getting a home in the US should wait for prices to fall further, a leading international property group advised today.

Brits who want to benefit from the recent drops in house prices in the US are being warned the property market is not yet ripe for investment.

The Assetz property group said: "The continuing slide of the US dollar means better buying opportunities will arise over the next year in the States. New-build prices were down ten per cent year-on-year last month and the dollar, currently at $1.94 to the pound, could drop to well over $2.00 to the pound over the next 12 months or so, as the US economy slows."

This means prices for properties in the US could drop by five to ten per cent through currency changes alone, outside of falls in house prices.

Assetz add there is a "real risk" to the American economy from countries such as like China and Japan diversifying their foreign exchange reserves away from the dollar, which would be devastating for the US economy.

"The message to those hoping to invest in the States is hold off - there is further to go before the market stabilises and offers the prime opportunity to investors," explained Stuart Law, managing director of Assetz.

"It is not yet clear how severe the downturn in the economy and the currency will be, so investors should avoid being tempted by current high profile advertising and marketing on US property.

"My advice to those who already own property in the US would be to avoid panic selling and instead take a long term view, placing a strong focus on maximising letting potential.

"The rental market could benefit from any house price collapse and if the value of the dollar continues to tumble as expected, international tourism will soar, providing great stability and demand for rentals."

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