Chandan Economics’ stress test of 3,900 originated mortgages recently showed “the credit risk of new apartment mortgages weakened over the course of 2012.” [See CPE Feature Article.] Sam Chandan, chief economist, in an interview with CPE, answered questions about the magnitude of the lending risks and suggested that low-cost financing, rather than excess liquidity, is causing the increases in property valuations.
Upward Pressure on Property Valuations:
Low-cost financing is allowing investors to compete more aggressively for acquisitions, in the apartment sector and for core office assets in particular. That is exerting upward pressure on prices that must be offset by sustained income growth.
Read more...Lending ‘Bubble’?: Interview with Sam Chandan | Commercial Property Executive
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