Housing is too expensive. It is damaging economies and poisoning politics
crisis of 2008-10 illustrated the immense dangers of a mismanaged housing market. In America during the early to mid-2000s irresponsible, sometimes illegal, mortgage lending led many households to accumulate more debt than they could sustain. Between 2000 and 2007 America’s household debt rose from 104% of household income to 144%. House prices rose by 50% in real terms. The ensuing wave of defaults led to a global recession and nearly brought down the financial system.
Traditionally politicians like it when house prices rise. People feel richer and therefore borrow and spend more, giving the economy a nice boost, they think. When everyone is feeling good about their financial situation, incumbent politicians have a higher chance of re-election. Malfunctioning housing markets also hit the supply side of the economy. The rich world’s most productive cities do not build enough new houses, constraining their growth and making them more expensive than they would otherwise be. People who would like to move to London, San Francisco or Sydney cannot afford to do so.
Other research, meanwhile, has found that housing is behind some of the biggest political shocks of recent years. Housing markets and populism are closely linked. Britons living in areas where house prices are stagnant were more likely to vote for Brexit in 2016, and French people for the far-right National Front in the presidential elections of 2017, according to research from Ben Ansell of Oxford University and David Adler of the European University Institute.
Malaysia Latest News, Malaysia Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
What is the future of the rich world’s housing markets?Singapore, where 80% of residents live in government-built flats, is in some respects the model to copy
Read more »
Root leads England to brink of victoryCaptain Joe Root led from the front as ruthless England took 10 wickets on Sunda...
Read more »
SAG Awards Nominees 2019: See the Full List HereThis particularly pugnacious awards season continues.
Read more »
Kevin Hart Feels No Type of Way After Oscars Goes Hostless Yet AgainNo host, no problem for Kevin Hart.
Read more »
Contract Losses Sink Apollo’s Defense BetCompetitive setbacks, coupled with reduced diplomatic security spending in Iraq and Afghanistan, have pushed Apollo’s defense contractor Constellis to the brink of bankruptcy
Read more »