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I'd like to understand how a property boom fuels domestic consumption anyway. Some make money out of it, and so may spend. But there's a buyer for every seller, and rising prices mean the buyers are having to raise higher loans (constricting their available income as they repay higher annuities).

Unless refinancing mortgages allows a third group, those who have owned property for some time but are not selling, to pull "value" out of their asset and spend money. But that kind of credit was not available in the French banking system.

From memory, the French property boom ran from around 2000 to probably, last year. Not ten years.

by afew (afew(a in a circle)eurotrib_dot_com) on Mon Dec 3rd, 2007 at 10:04:11 AM EST

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