This could prompt a tightening of credit conditions and, in turn, set off a mutually reinforcing deterioration in real activity and financial stability.
This appreciation or "bubble" inevitably bursts resulting in an asset price collapse, a dramatic tightening of credit, depressing business and household spending and crushing asset values on balance sheets.
This reduces demand for houses, lowering prices and driving increases in foreclosures, leading to further tightening of credit standards and a vicious growth-destroying cycle.
Now, after plugging the capital shortfalls of developers amid a drop in real estate prices and a tightening of credit, trusts are facing repayment risks.
