Understanding Property Markets. To what extent does property market Essay

Understanding Property Markets. To what extent does property market disappointment give a necessary and sufficient case for public intervention using planning controls - Essay Examplecurrent financial crisis clearly indicates that the link of the financial as well as property market set up lead to the overall failure of the markets because the volatile nature of one market can readily impact another market if they are correlated with each other in any sense. In the past, it has been the practice of the financial institutions that they greatly offered well money which allowed relatively higher volume of people to buy their own homes. This phenomenon, however, also gave rise to the speculative activity within the market which not but led to the price appreciation but also made the market more than volatile and prone to economic shocks. This effect has been so much that it was estimated that more than 590 billion British Pounds were wiped out from the property market only during 2 008. (Knapton, 2008).Such symptoms indicate that the property market is prone to failure and as such may require the regimen intervention in the market through planning controls. This essay will discuss whether the recent failure makes a case for government to intervene in the property market or not.It is argued that the free markets do not always provide the efficient allocation of resources. There are diverse causes of market failure and as such information imperfections, externalities as well as capital market imperfections are some of the causes which can be cited as the few major reasons behind the failure of the markets. (Keep,2006).Whether government shall intervene into markets to correct them or not is an issue of great debate which has been re-emerged again. During 1990s, it was argued that the extension of credit has a greater macroeconomic impact on the economy as credit has extensive linkages with different markets such as property markets as well as consumer durable s.(Eichengreen & Mitchener, 2004). Property markets along with other markets, therefore, started to grow and reached to a level where it failed to accommodate the economic shocks and resulted