The Integration of Property and Financial Markets

In this paper, the nature of property and the growing links between property and financial markets are addressed. It is argued that property must be viewed as a commodity with use-value and exchange-value aspects. Property has been affected by two developments in the 1980s: the shift to services (especially financial services) and waves of deregulation. The increase in demand during the 1980s boom stemmed both from investors such as property companies and from end users, especially those engaged in or expanding into securities business following Big Bang. As property markets, including the housing retail finance circuit, became increasingly intertwined with wholesale financial markets they became more susceptible to the vicissitudes of these markets and tendencies toward crisis. The exchange value of property became disengaged from its use value as property took on the attributes of a quasi-financial asset.