The term ‘soft landing’ is a phrase commonly used in the mortgage industry to describe a controlled decline in the housing market and other financial markets. This type of market correction avoids the potential disruption of a market crash or a bubble burst. It enables economic adjustments to be made without the risks associated with a severe drop in market value.
Soft landings are usually characterised by slower rates of growth and an appreciation of the stability of prices. The consensus among experts is that a soft landing is ideal for a stable economic environment. It avoids the impacts of an abrupt crashing market, which can be highly damaging for the entire economy. It also preserves long-term market mechanisms such as investment, savings, consumption, and innovation.
Key Elements of the Soft Landing Summary:
• A soft landing is a controlled decline in the housing market and other financial markets
• Helps to avoid the disruption of a crash or bubble burst
• Slower rates of growth and an appreciation of the stability of prices
• Avoid the impacts of an abrupt crashing market
• Preserves long-term market mechanisms such as investment, savings, consumption, and innovation
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