The UK Housing Market: Measured Decline or Total Collapse? John Muellbauer and Stephen Nickell Stated Meeting Seminar Nuffield College 7 th March, 2009 What has been happening? House prices, house-building, households, incomes. Do all the recent changes matter? Prospects:
John Muellbauer and Stephen Nickell
Stated Meeting Seminar
7th March, 2009
House prices, house-building, households, incomes.
House prices, house-building plans, households.
Basically, the “price” of houses is fixed at the level at which the demand for houses today is equal to the fixed stock available today.
In the recent past, demand has been shifting to the right more rapidly than the stock (which moves to the right by around 3/4% perannum).
So house price inflation depends on how fast demand rises relative to the available stock.
The Supply Side
For illustrative purposes only
LQ Affordability Ratio
Source: The New Yorker
Mortgage and you.”
Lower Capital of
↓Home Prices &
Risk, Money &
Bond Mkts Hit
on All Loans
Blockages to unorthodox monetary policy
or ‘quantitative easing’:
Back of the envelope calculations:- income and pop growth relative to stagnant housing stock; some to shift in credit availability and low interest rates.