Flat Home Market Sinks Debt-Based Economy
If you want to know what an on-going property bust looks like, there is the example of England. "Mortgage equity withdrawal slumped to 6.9 billion pounds in the fourth quarter of 2004, the lowest since the final three months of 2001, according to Bank of England statistics."
"'The main trigger has been a slowdown in the housing market sufficient to remove a lot of finance that was boosting the consumer,' John Butler, economist at HSBC said. 'Less mortgage equity withdrawal means less finance available to households, so even a slowing housing market is enough to cause a turnaround in consumer spending.'"
"Consumption has driven 80 percent of the expansion in the U.K. economy since 1997. About 70 percent of the jobs created in the U.K. since 1997 have been directly related to the expansion in consumer spending and the property market, Butler estimates. That means employment will suffer as the property boom fizzles. He predicts as many as 230,000 job losses by the middle of next year."