UK – are property cycles a result of striving for unrealistic homeownership levels?
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Interesting article by the Economics Editor of the Telegraph in the UK entitled “Property Market – the Twilight Zone“.
Clearly the UK has already seen a very large drop in prices (c.15%) over the past year with certainly no sign of a bottoming out. Whilst the global credit crisis is a major contributor to the decline – the signs were writ large well ahead of this time. This article valuably analyses the impact of the UK government’s desire to strive for ever higher levels of home ownership – this policy being shared here in NZ.
Interestingly though Germany which has lower levels of homeownership (43%) has been immune to the ravages of property cycles on a macro level especially through the last decade, whilst they did see a bubble in the post unification era of the 90′s but despite anticipated bubbles as yet none have eventuated. Whilst a rise in ownership would probably lead to a bubble – the over ambitious attainment of ownership levels of the high 60% and 70%’s may be a factor in fueling bubbles.
I guess we just follow the trends set in other Western economies and several measures have been put in place lately by Government to assist with home ownership like shared equity and the Welcome Home Loans scheme. So we are no different to other countries in this regard.