The main story, though, is one of reduced demand for credit, rather than reduced supply. When housing prices are falling, investors are less likely to enter the market and to borrow. So too are owner-occupiers for a while.
But they should not become of a persistent and structural nature. Unfortunately, very large imbalances were allowed to accumulate over recent years in several European countries. These imbalances stemmed from different sources: insufficient fiscal discipline, financial excesses, failure to implement structural reforms especially, but not exclusively, in the labour and product markets and significant competitiveness losses. All of this necessitates urgent and resolute adjustment.