The bubble burst this time because of overlending and overborrowing by people who were not good credit risks ie most of the general public. The cheap money ran out. What happened last time ( late 80's )was encouragement to trade on the market through time limited double tax relief which caused rampant house price inflation.

The party is over and what is happening now is market correction . However housing is not a luxury item for most people -its a necessity hence ' market correction ' for many means negative equity and huge debts, and loans being called in. Housing has a unique position in our economy and hence there is a need to build in some protections into the system to provide some balance and protection for the most vulnerable. It also to a limited extent maintains some aspects of the economy through providing jobs and cashflow.

Last time I witnessed people in my block of flats just handing over their keys and walking away debtridden which took them years to recover from. Relationships, families and health suffered. I witnessed ordinary people and families dispossessed , desperate and homeless through no fault of their own. Only through sheer luck did I not join the statistics. I recall this starting in 1988 not 1991 ( when was your recession!) and a gradual coming out of by 1995- 7 years effectively.

However what is rather different this time is that essential commodities have been subject to hyper inflation because of oil prices, more so than luxury goods, also we have less control than ever over our energy supply, the costs of which are simply extortionate and warrant further government investigation. Its when you have trouble paying for the basics that things can get rough for a larger section of the community.

What we still need in the UK is less reliance on owner occupation as the main respectable form of tenure and more general affordable renting as is the way in most European countries. Only then can we avoid the extremes of inevitable boom and bust cycles.