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A combination of continually rising house prices and pessimism about the future is threatening to send into reverse the explosion in home ownership stimulated by Margaret Thatcher 30 years ago, making Britain more like Europe, where living in rented property is the norm.
Can we pick apart this narrative?

First of all, if Maggie had to stimulate home ownership to get the UK to where it is today, then the UK 40 years ago was "more like Europe".

Then, did Maggie do more than stimulate a 30-year housing price bubble by making it easier to buy a property on credit?

Finally, prices cannot continue to rise forever beyond what's affordable. Something has to give. And a lot of "organised support" has been brought to bear on the UK housing market to avert a price crash that might have happened in 2005 or thereabouts (see here).

I claim the first "undulating plateau" starting around 2004 is a signature of artificial price support, and then they managed to restart the bubble until the Global Financial Clusterfuck. Now, London may well deviate from this national average, but still...

Economics is politics by other means

by Migeru (migeru at eurotrib dot com) on Wed Jun 1st, 2011 at 10:49:39 AM EST
... would have been a lot more informative if it had been normalised to median income instead of a price index.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Wed Jun 1st, 2011 at 11:05:34 AM EST
[ Parent ]
You mean like French economist Jacques Friggit?
His famous curves show housing price index normalized to "available income" (after taxes, contributions etc...). It's useful to visualize how much of people's income is going into the property dream...

One example:

Other documents here.

by Bernard on Sat Jun 4th, 2011 at 12:50:31 PM EST
[ Parent ]
As a small question, who are the landlords in other countries in Europe it local communities? or is it  financial organisations and aristocracy?

The big maggie stimulation was to offer council tennants houses at knock down prices (based on the ammount of rent they had already paid) and use the money that came from this to cut the ammount of grant paid by central government into local councils. That cut was forwarded directly If I understand correctly onto tax cuts for the higher earner.

Any idiot can face a crisis - it's day to day living that wears you out.

by ceebs (ceebs (at) eurotrib (dot) com) on Wed Jun 1st, 2011 at 11:30:59 AM EST
[ Parent ]
In Denmark, the rental market consists of (a) people who move out of a property (due to marriage, job change, etc.) but do not wish to sell due to contemporary market conditions, (b) pension funds and similar institutional investors (who like rental property because it's a nice hedge against rising housing costs for their subscribers), (c) various forms of private and semi-private cooperatives and (d) public housing, which serves as a (price) buffer and provides capacity to re-house homeless quickly.

And then you have a variety of intermediate forms between full ownership and leases, such as andelsboliger where you have a group of owners who leverage their greater collective income security and bargaining power into cheaper loans.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Wed Jun 1st, 2011 at 12:02:23 PM EST
[ Parent ]

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