Property Cycles - UK Experience Essay Example | Topics and Well Written Essays - 2000 words

Property Cycles - UK Experience - Essay Example The above described cycles have been proved to have a significant role on the development of national economy (or its decrease during periods of recession). The research focuses on the effects of property cycles on the economy of Britain as these effects can be observed on the daily consumption behaviour of people across Britain. All parts of the property market development as well as the risks that are related with the specific part of the economy are going to be analyzed emphasizing on the potential use of property cycles in order to support the local economy. Generally, it could be stated that the property market is characterized by continuous and radical changes. The specific issue has been examined by Pain et al. (1994, 53) who noticed that ‘the behaviour of the personal sector has changed markedly over the past 15 years, coinciding with a period in which overall consumers expenditure proved extremely difficult to forecast with any degree of accuracy’. Because of the above phenomenon, the national economy – which is closely related with the property market - faces severe turbulences by achieving a significant level of growth when the prices of houses are increased and having severe losses in periods that the prices of houses are decreased because of the lack of monetary resources available that they could help the enhancement of the property market. In a relevant research published by National Statistics Online (2007) it was revealed that ‘a feature of home ownership in the United Kingdom is the relatively lar ge number of homes purchased with a mortgage; approximately three quarters of house purchases are financed with a mortgage loan facility’. This means that consumers in Britain cannot afford the purchase of a new house and for this reason they seek for the support of the financial institutions. However, if taking into account the fact that borrowing cannot be increased on a continuous basis (such a fact could lead the national economy to severe