66
views
0
recommends
+1 Recommend
0
shares
    • Review: found
    Is Open Access

    Review of 'Breaking the housing–finance cycle: Macroeconomic policy reforms for more affordable homes'

    Bookmark
    4
    Breaking the housing–finance cycle: Macroeconomic policy reforms for more affordable homesCrossref
    This paper argues that the housing affordability and wealth inequality crises are driven by a cycle
    Average rating:
        Rated 4.5 of 5.
    Level of importance:
        Rated 4 of 5.
    Level of validity:
        Rated 4 of 5.
    Level of completeness:
        Rated 4 of 5.
    Level of comprehensibility:
        Rated 5 of 5.
    Competing interests:
    None

    Reviewed article

    • Record: found
    • Abstract: found
    • Article: found

    Breaking the housing–finance cycle: Macroeconomic policy reforms for more affordable homes

    This paper argues that the housing affordability and wealth inequality crises facing advanced economies are driven by the emergence of a feedback cycle between finance and landed property. The cycle has been created by the increasing policy preference for private home ownership coupled with the liberalization of bank credit and accompanying financial innovation. Under such conditions, landed property becomes both the most attractive form of collateral for the banking system and the most desirable form of financial asset for households and investors. The housing–finance cycle emerged in Anglo-Saxon economies in the 1980s but has since spread to most advanced economies. Demand-side reforms, more than the supply-side reforms that dominate policy discussion, are required to break this cycle. Two reforms are discussed: (a) structural and institutional reforms to banking systems, including central banks; and (b) land policy reforms targeted at reducing the potential for rent extraction and speculative profits from property ownership.
      Bookmark

      Review information

      10.14293/S2199-1006.1.SOR-UNCAT.AZY2VY.v1.RCIZQA
      This work has been published open access under Creative Commons Attribution License CC BY 4.0, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. Conditions, terms of use and publishing policy can be found at www.scienceopen.com.

      Review text

      This paper argues that the housing affordability and wealth inequality crises in advanced economies are driven by a feedback cycle between finance and landed property. This cycle has emerged due to the policy preference for private home ownership and the liberalization of bank credit, which has made the landed property the most attractive form of collateral for the banking system and the most desirable form of financial asset for households and investors. The paper suggests that demand-side reforms, including structural and institutional reforms to banking systems and land policy reforms aimed at reducing rent extraction and speculative profits, are required to break this cycle.

      Comments

      Comment on this review

      Version and Review History