From: "Roland Watson" 
Newsgroups: uk.finance
Subject: Re: Effects of house crash on economy
Date: Wed, 14 Apr 2004 14:30:37 +0100

That begs the question of what could cause the economy to falter. One
opinion touted a lot is that a lot of the consumer-led recovery is based on
remortgaging. A drop in house prices would surely curtail that severely.

Roland.

"Mark Carter"  wrote in message
news:XOafc.30466$h44.4347891@stones.force9.net...
> >>had a recession during that downturn, but the causal link is not always
> >>clear since we also had a period of high oil prices then due to Gulf War
>
> I think it's important to distinguish between which is cause, and which
> is effect. If house prices fall, then why should that really cause
> problems for the economy? It wont be so good for the house builders, of
> course.
>
> If the economy were to falter, on the other hand, then that's a
> different kettle of fish. I would be very suprised if house prices
> didn't fall as a consequence.
>
> Also, as a previous poster pointed out, if house prices fell by 30% (or
> was it 40%), then they'd still be at 2002 levels. I'm sure this news
> would be plastered all over the gogglebox, and the Money Programme will
> tell us all the doom and gloom relating to housing, and what's going to
> happen to the economy. But would you necessarily expect that this
> implied that the economy was about to collapse?