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Monday 08th of March 2010
March 2, 2010    

Buffett confident of US housing market recovery

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by Kay Murchie
Buffett confident of US housing market recovery

Respected US billionaire investor Warren Buffett has said the problems in the US property market will be over within a year.

In his annual letter to shareholders in Berkshire Hathaway, the investment group controlled by Mr Buffett, he said prices will remain ‘far below bubble levels’ for the medium term.

He added: “People thought it was good news a few years back when housing starts - the supply side of the picture - were running about two million annually. But household formations - the demand side - only amounted to about 1.2 million. After a few years of such imbalances, the country unsurprisingly ended up with far too many houses.”

He believes by reducing new housing starts to a number far below the rate of household formations is the best way to solve the problem.

The most recent figures from the US Commerce Department showed housing starts increased for the month of January.

Construction of new US homes rose 2.8% during the month to a seasonally adjusted annual rate of 591,000 properties.

While this represented the highest level in six months, the figures are still far below the peak of autumn 2007.

Meanwhile, seventy-nine year old Buffett who is often referred to as the ‘Oracle of Omaha’ was ranked by Forbes as the richest person in the world in 2008.

His comments come as Berkshire Hathaway announced a surge in Q4 2009 profits.

Net income for the company soared to $3.06 billion (£2 billion) from £117 million in the same period a year ago.

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