The key to it all is how much and how far out will lenders go in...

  1. 5,447 Posts.

    The key to it all is how much and how far out will lenders go in the housing market. In Japan they went as far as the next generation to pay off mortgages before their collapse. Way back in the past mortgages were as short as ten years, then went out to 20, 25 years, and on to 30 years. In troubled times we can extend our mortgages and soften the blow. Due to better health care lenders see people being able to pay mortgages into their 60's and beyond. This has created the huge liquidity in the property markets and onto the stockmarkets. However it is not difficult to see that a limit is ahead if not already reached when lenders will not to the general population on bigger time scales and low interest rates. A plateauing will occur accompanied by a sudden drop back.....a la Japan.....and then a long period of stagnation. The only other alternative that I see is the adoption of leasehold real estate as is prevalent in London. Because the land is so expensive, freehold is abandoned and you buy a 99 year lease which enables you to enter the property market. So if we can't sell our pricy property we may have to go leasehold to keep the market moving, but at a slower pace.
 
arrow-down-2 Created with Sketch. arrow-down-2 Created with Sketch.