What was unusual about the last cycle was the length of its upturn. After the economy had reached its potential production level, there followed three more years of relative strong growth before the cycle turned down. The prolonged rise is attributable to consumer spending. A strong autonomous increase of employment led to a favourable development of households’ incomes.
This, combined with low real interest rates and a generous disposition by mortgage lenders, led to a sharp rise in housing prices. The withdrawal of the resulting equity on the value of home property gave a strong additional push to household expenditures. The decline also shows a few distinct features, most prominently the development of foreign trade.