ABSTRACT
The boom-bust cycle of the property development industry has clearly had a detrimental effect on the British economy. While rapid inflation during the mid1970s removed much of the long-term impact of the first property crash, by reducing the real value of the indebtedness which followed it, the consequences of the 1990 crash are still being felt in the property market and the wider economy. The property companies have experienced the most rapid growth of any of the players in the property market during its upswings, and the most catastrophic collapses during its slumps. Property companies face incentives to undertake high-risk strategies; however, their ability to pursue such strategies is constrained by the willingness of the banks to lend them the necessary finance. Property companies found that accounting legislation enabled them to produce accounts which were profoundly misleading to their shareholders but were still perfectly legal.
