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Breaking the housing–finance cycle: Macroeconomic policy reforms for more affordable homes

Ryan-Collins, J; (2019) Breaking the housing–finance cycle: Macroeconomic policy reforms for more affordable homes. Environment and Planning A: Economy and Space 10.1177/0308518x19862811. (In press). Green open access

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Abstract

This paper argues that the housing affordability and wealth inequality crises facing advanced economies are driven by the emergence of a feedback cycle between finance and landed property. The cycle has been created by the increasing policy preference for private home ownership coupled with the liberalization of bank credit and accompanying financial innovation. Under such conditions, landed property becomes both the most attractive form of collateral for the banking system and the most desirable form of financial asset for households and investors. The housing–finance cycle emerged in Anglo-Saxon economies in the 1980s but has since spread to most advanced economies. Demand-side reforms, more than the supply-side reforms that dominate policy discussion, are required to break this cycle. Two reforms are discussed: (a) structural and institutional reforms to banking systems, including central banks; and (b) land policy reforms targeted at reducing the potential for rent extraction and speculative profits from property ownership.

Type: Article
Title: Breaking the housing–finance cycle: Macroeconomic policy reforms for more affordable homes
Open access status: An open access version is available from UCL Discovery
DOI: 10.1177/0308518x19862811
Publisher version: https://doi.org/10.1177/0308518X19862811
Language: English
Additional information: This version is the author accepted manuscript. For information on re-use, please refer to the publisher’s terms and conditions.
Keywords: housing, land, economic rent, financialization, credit
UCL classification: UCL
UCL > Provost and Vice Provost Offices > UCL BEAMS
UCL > Provost and Vice Provost Offices > UCL BEAMS > Faculty of the Built Environment
UCL > Provost and Vice Provost Offices > UCL BEAMS > Faculty of the Built Environment > Inst for Innovation and Public Purpose
URI: https://discovery.ucl.ac.uk/id/eprint/10078331
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