‘Schoolboy Economics’ Wrongly Validate A Housing Non-Crisis In The UK

row of one storey houses in Birmingham, England
Austin Village 8 photo by Oosoom is licensed under CC BY-SA 3.0
The middle class housing crisis in the UK, explained.

We’ve seen several articles recently that address a conspiracy-theory notion of an affordable housing ‘crisis’. Note in the previous sentence how the quote marks around affordable housing ‘crisis’ tend to call into question whether it actually exists. Is it actually nothing but fake news promoted by special interests?

We recently explored two articles that directly called into question the existence of a housing crisis — one by a left-leaning publication which took a statistical approach featuring the ‘average american’ and demoted the ‘crisis’ to the status of myth. The special interest driving this analysis wasn’t exactly evident, except perhaps as an intellectual exercise that generalized many different crises into one in order to make it vanish. The second attack on the notion of the affordable housing ‘crisis’ we explored was in a right-leaning publication. Its primary purpose seemed to be to absolve the US federal government from any responsibility to get involved. For more on these attacks, try: Turn Menace Into Myth: How To Bigfoot An Affordable Housing Crisis

Now, a UK based exploration of  the housing ‘crisis’ has caught our attention, entitled Schoolboy Economics And The ‘Housing Crisis’. With the quote marks, we expected a further effort to turn the crisis into myth.

We were right about that, but also surprised, because the article focused careful attention on just one of many housing ‘crises’ — the middle class so-called ‘crisis’ faced by those trying to climb aboard the housing ladder.  We’ve had our doubts about the existence of this particular ‘crisis’ for a long time, suspicious that it has all along been a housing industry promoted way of squeezing subsidies from government as well as a lure for middle class votes.

For an exploration of the roots of this so-called ‘crisis’, the author turns away from the simplistic ‘build more — cost less’ economics that apply poorly to the housing market. Instead, he focuses on interest rates and the cost of borrowing as factors that hinder home-buyers from hopping casually and painlessly onto the ownership ladder. Ultimately he questions whether generally there has been any real change over the past few years that have triggered a housing ownership ‘crisis’.

Since interest rates have remained low in many countries of late, there is reason to presume that the author’s economic analysis makes sense beyond the United Kingdom. Read more in Chris Brown’s article in HOUSING TODAY: Schoolboy Economics And The ‘Housing Crisis’