House prices to drop much lower: Greenspan | Reuters

House prices to drop much lower: Greenspan | Reuters: "VIENNA (Reuters) - A big overhang of property will bring U.S. house prices down further, but it is too early to say if the economy will plunge into recession, former Federal Reserve chief Alan Greenspan was quoted as saying on Friday. Greenspan said in an interview with Austrian magazine Format that low interest rates in the past 15 years were to blame for the house price bubble, but that central banks were powerless when they tried to bring it under control. 'It's a difficult situation, there is an enormous overhang on the real estate market,' Greenspan was quoted as saying. 'Many buildings which just have been finished can't be sold ...' 'So far, prices have dropped only slightly. But it was enough to cause alarm around the world,' he said. 'Prices are going to fall much lower yet.' 'However, it is too early to answer the question about a recession. We simply don't know yet. It depends on how flexibly the economy can react,' he said. Greenspan said deregulation and the introduction of market economies in the former Communist bloc after the Berlin Wall fell in 1989 had caused a global boom and a worldwide reduction of interest rates, which both helped fuel the property bubble. 'There is no doubt about the fact that low interest rates for long-term government bonds have caused the real estate bubble"