When the property market is falling buyers tend to wait until it falls further. Why buy now when you can get a lower price in a few months’ time? So the market falls further because some people need to sell and lower their price.
We could create a new type of contract. You sell at today’s price but contract with the buyer that in a year (or two years) if the house price index has fallen by a further twelve per cent then you refund that twelve per cent to the buyer. There is now no point in waiting. So the market stops falling and you may not have to refund anything. This could be a new type of contract which anyone could be free to use.
Edward de Bono
3rd November 2008
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