A sharp fall in property prices can lead to financial instability in many ways. A decline in prices tends to be associated with economic weakness as housing construction grinds to a halt, triggering financial strains and defaults among property developers, construction companies and real estate firms. Rising unemployment also leads to mortgage arrears and defaults among households.
For many commodities, global inventories are now quite low and it would appear that we are currently operating on a relatively steep part of the global commodity supply curve, with weather-related disruptions adding to the recent price pressures for some commodities.