The Effect of the Economic Downturn on the Properties Industry in South of France: Cote D'Azur , Province - Literature review Example

The collapse of the US banks in the year 2008 – begun especially with the Lehman Brothers bank – had a critical impact in triggering an era of crisis that quickly spread into the other parts of the globe as well. As a result of this crisis the inter banking market across the world has quickly dried out; this was added with the additional factors like subtler and more difficult lending conditions, higher prices of borrowing for companies to accumulate capital assets, expand and/or maintain their existing business volumes and constant collapses suffered by the stock markets (Jannsen, 2009; Allen and Carletti, 2009).

The slumping confidence of consumers which reflected in the business sectors as well has become a major factor behind the consistently dropping rates of Gross Domestic Product (GDP). The net results of these events has been a more than noticeable decline in the investment areas of corporate sector in addition to a major restocking and a compressing experience in the world trade segments as also threatening levels of deterioration in the labor markets across the world – this has been particularly true in the case of property industrial workers (OECD, 2008; ILO, 2009; Woods, 2007).

This situation, unprecedented at least ever since the 1945 crisis, has caused the Organization for Economic Cooperation and Development countries (OECD) to experience a contraction in their combined GDP by 4.5% from its elevated conditions that the first half of 2008 had witnessed. From this peak conditions the GDP of the OECD countries reached right into the bottom levels by the first half of the year 2009. Nevertheless the intensity of the trauma experienced by the different economies was also further subject to the specific – both internal and external – conditions of those countries.

These were, by and large, further determined by previous excesses in the debt levels and the condition of the financial institutions, the capacity of the respective economy to spring back and adjust itself to the crisis – further depended upon such factors as the wealth effect’s significance, the extent to which the economy has remained open to the global financial institutions, the efficiency of the automatic stabilizers and so on. (OECD, 2008 and 2009). In other words the impact of the crisis on different countries has varied considerably from each other depending upon a large number of other factors that were specific to those economies.

A clear reflection of this heterogeneity in the intensity levels of the crisis’ impact could be had from the context of Europe itself where this impact has been acutely abrupt and varied with countries like UK (-5.7%), Italy (-6.5%) and Germany (-6.7%) having undergone a peak to trough trend whereas countries like France (-3.4%) and Spain (-4.1%) experiencing only comparatively milder levels of impact. However the French economy has started showing definite positive symptoms by the second half of the year 2009.

Apart from France only Germany and Japan did manage to show symptoms of some growth during this period (OECD. 2008). It is precisely amidst this global scenario that the question of housing and mortgage markets has been located. The housing and mortgage market has played a significant role in most of countries apart from the major influence it has exerted, in terms of its role in the current crisis, in the United States and some of its European counterparts. Drawing a comparison with the housing market the price cycle in