Warren Buffett is confident of US property market recovery

US billionaire investor Warren Buffett has predicted the downturn in the US property market will be over within a year.

In his annual address 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 that 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 starts for US houses rose 2.8% during the month to a seasonally adjusted annual figure of 591,000 properties.

However whilst this figure is the highest level in six months, it is still far below the peak of third quarter 2007.

Meanwhile, seventy-nine year old Buffett was ranked by Forbes as the richest person in the world in 2008.

His comments came as Berkshire Hathaway announced a surge in fourth quarter 2009 profits.

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

Source ABC money March 2010