Episodes of Housing Crashes and Never Recovering Looking at many housing markets in major cities around the world today it looks like most (London, New York, Sydney, Beijing, Toronto,...) have become totally detached from the earnings of the local market. This seems unsustainable but I can only think of one chart, see below, of Japanese property that goes into a boom, crashes and never recovers.

 

Are there any other episodes in recent history where the price of real estate crashes and never recovers in price?
Maybe the case of Germany before and after WWI could provide you an example. See here. The short story is that there was a big housing shortage before the WWI, which, after the war, which was no solved by the market, because of rent controls, profits controls, and other regulations.

The origin of housing shortage and rising prices:


  Germany's housing problem originated in the period of rapid industrialization,  population  growth,  and  urban  concentration  between  1870
  and  1914. Population mushroomed  from  41  million to  67 million,  and
  by   1910  twenty-six German  cities  boasted populations of  200,000.


This led to:


  high  real  estate  prices, heavy mortgage indebtedness, and high rents


State intervention begun:


  Systematic government  intervention  in the German housing  market
  began  during  World  War  I. 


Some thought it would stop after the war:


  After  the war,  many  Germans  would  have  been satisfied  to  permit the wartime measures to  expire,  allowing the economy to  return  to  "normal." With  a return  to  normalcy,  private  enterprise would return to the housing market, eliminating the need for state intervention.


However, this did not happen:


  Plagued by inflation and  a severe capital shortage, the German housing
  industry  failed  to return to normal. The little capital that was available
  commanded exorbitant interest  rates;  until the credit crisis of June 1931
  first mortgage interest rates hovered between  8 and   10.8 %  per cent. ...  Predictably, there was practically no  demand  for new  housing,  and  thus very  little new construction. ...  


The state capacity to build was also damaged: 


  the war  effort  had exhausted  Germany's  capital supply, the loss of her colonies, merchant marine,   and  industrial  investments   in  Alsace-Lorraine  diminished  the nation's  capacity   for  new  capital formation,
    and   reparations  payments appeared to have first claim  on  any capital formation  the country might manage.


So, albeit not the exact narrative of a modern housing crises, it might be of help.