ix touring, I don't disagree with you. There is however a whole other world outside of owner occupied and BTL residential properties. This whole situation started as a result of secondary property and BTLs. The banks in the US and UK over funded in this sector and couldn't sell their debt, thus not being able to created more liquidity (I think you could argue securitisation has a lot to answer for). Suddenly individuals couldn't afford to keep their BTLs AND because of the lack of liquidity individuals couldn't refinance. Too much supply v not so much a lack of demand but lack of affordability and lack of finance = residential values fall. (investment sector)
This has inturn had an impact with commercial property, falling property values, tenants unable to pay rent etc. suddenly the cost of debt (interest payments) cannot be serviced from rent and banks start to call in their loans causing a spiraling effect on values and the economy.
A further potential issue is that a lot of pension funds invest in commercial property, borrowing significant amounts to increase the return on their equity. If commercial property values fall or tenants (like Lehmans, HBOS, Northern Rock, AIG, XL, ZOOM etc) default what happens to the pension fund? We the public lose!
Let's hope the Banks gain confidence in one another soon as this would greatly assist the situation.