The 2007/2008 global financial crisis is one of the greatest financial problems that the world has ever experienced. Financial analysts denote that due to this crisis, most financial institutions collapsed, and most government in the world were about to become bankrupt. Ahrend and Goujard (2013) denotes that one of the reason for the occurrence of this financial crisis is a fall in the mortgage banking in United States, and it had a spiral effect, affecting most countries whose economies are dependent with that of the United States. Grant (2012) disagrees with this assertion, and denotes that some of the major reasons for the emergence of the global financial crisis were weak government controls of the financial institutions. Ahrend and Goujard (2013) believe that irrational exuberance is the main cause of global financial crisis. Shiller (2000, p. 4) defines irrational exuberance as an aspect whereby an individual is engaged in a speculative behavior. Grant (2012) maintains that on most occasions, speculative investors will always act on limited information for purposes of making an investment, this is more so, when it comes to investing in the property and housing market. In the view of Efenhoff (2009), there is a misplaced assertion that property houses will always increase in value, irrespective of the economic situation. Ahrend and Goujard (2013, p. 3015) maintains that a number of the rationale explanations have been given concerning the run up to housing prices in the United States and Europe since the later periods of the 1990s.

One such explanation is that because of population pressure, pieces of land for building homes have diminished. Based on this fact, the housing prices have arisen because there is a limited supply of the homes. Shiller (2005, p. 16) maintains that another rationale explanation given towards the ever rising prices of land, and houses is based on the materials and resources that go into houses. Materials such as steel, concrete, and lumber are always in great demand, and are increasingly becoming expensive. Based on the nature of materials that goes into homes, Efenhoff (2009) maintains that the housing prices will never depreciate, but will constantly appreciate in value. Grant (2012) further maintains that the housing boom always results to the interest rate cut that is always implemented in various countries of the world, for purposes of dealing with a weak global economy. In as much as low interest rates play a role in increasing the home prices, central banks have always reduced interest rates on numerous occasions in history. However, these reductions have never experienced a concerted boom in the housing prices as experienced in the periods of 1990s, and early years of 2000s.