Property Market Cycles as Paths to Financial Distress
نویسندگان
چکیده
Property market busts are usually implicated in some way in episodes of financial instability. The losses on US mortgages that sparked the recent financial crisis are a good example of this connection, as are the episodes in Japan, Scandinavia and Australia in the early 1990s, which largely stemmed from commercial property lending. One might think property loans should be fairly safe, given the protection afforded to the lender by the collateral. History suggests, though, that property market cycles cause financial and economic busts far more frequently than does unsecured lending.
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