House price bubbles are driven essentially by housing supply and demand and, in particular, by effective demand: that is, demand mediated by finance. Over the past decade, a large expansion in available mortgage finance via securitisation created a very large increase in credit growth in the UK housing market, and therefore a huge leap in effective demand. The total effect was to exacerbate cyclicality and volatility in house prices, and therefore to heighten the risk of housing-driven economic boom and bust.
It is high time we re-examined the case for mortgage reform in the light of international lessons and our own rollercoaster ride on housing. After all, there is nothing aspirational or equitable about courting another recession.
Snakes and ladders: Tackling precarity in social security and employment supportAcross the country, people are trying to make ends meet, build financial security and pursue their aspirations. But, in a vicious cycle of snakes and ladders, many are being pulled down into poverty.
Making markets: The City's role in industrial strategyTo tackle climate change, we need a significant increase in public and private capital investment.
Broken hearted: A spotlight paper on cardiovascular diseaseProgress on cardiovascular disease was a significant driver of better health and prosperity in the latter half of the 20th century, however progress has recently stalled – with indications it may be in reverse.