Last year I was commissioned by the UK ministry of housing to write a report on the demand side-drivers of the housing affordability crisis.
After some election-related delays, here it is. (1/13)
ucl.ac.uk/bartlett/publi… The political consensus in the UK is that the housing crisis is driven by insufficient supply of new build homes. But this cannot possibly explain the five-fold increase in UK average house prices and the disconnect between prices, incomes and rents since the 80s.

The @Boe's decision to raise rates by 0.25% was flawed and bad economics in the short-term given the delicate state of the economy and the longer term.
Quick thread.
theguardian.com/business/2023/… First, there is no evidence that service sector or core (green line below) inflation has changed trajectory. Feb figures showed a small upturn but not a departure from the trend over the past year of around 6%.

New working paper🗞️
Standard equilibrium models of housing markets have failed to explain their cyclicality.
Kaveh Dianati & myself present a system dynamics model of the London housing market calibrated against existing data that does better.
Thread.
/1
papers.ssrn.com/sol3/papers.cf… The model is focused on interactions between house prices, mortgage credit and housing supply but incorporates 230 variables in total & thousands of reinforcing- and balancing feedback loops, building on the existing literature.
Below diagram is a simplified schematic.
/2

A few points on @jburnmurdoch's piece from last week.
1. Fully agree that higher density cities are a good idea. The Anglo model of single family homes (usually with cars) is massively inefficient environmentally & economically. Not sustainable within env. limits as popns grow.

https://twitter.com/jburnmurdoch/status/1636682164312973316

2. The de-coupling in supply between Anglo & Euro shown in graph above occurs in 1980s/90s but change in HP graph is indexed to 2013. No correlation.
One might also ask: "why have house prices gone up so much in countries like Sweden, Holland & France without supply issues?"

If the housing crisis was simply the result of not building enough private sector homes, one would expect market rents for homes to have increased against incomes over the past 50 years.
In fact the market rent-to-income ratio has remained around 30% (panel A).

https://twitter.com/JamesInCity/status/1629782151301419008

It is the privatisation of- and collapse in the provision of socially rented homes, removal of rent regulation & subsidies that has made renting unaffordable as @ianmulheirn and colleagues show in this report.
jrf.org.uk/report/housing…

Today we publish the first detailed academic analysis of the mechanics of the UK's spending, taxation and borrowing mechanics as an @IIPP_UCL WP.
Bad news for the MMT sceptics out there I'm afraid.
The government always creates new money when it spends.
newstatesman.com/economy/2022/0… The Consolidated Fund is the institution via which all spending and revenue collection flows. The CF has an interest free account at the @bankofengland, with no limits. When govt. spends this is debited & BoE credits govt. accounts in commercial banks. This creates new deposits.