UK – are property cycles a result of striving for unrealistic homeownership levels?
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.