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

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      Environment and Planning A: Economy and Space
      SAGE Publications

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          Abstract

          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.

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          Finance and Growth: Schumpeter Might Be Right

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            The financialization of the American economy

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              The urban process under capitalism: a framework for analysis

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                Author and article information

                Contributors
                (View ORCID Profile)
                Journal
                Environment and Planning A: Economy and Space
                Environ Plan A
                SAGE Publications
                0308-518X
                1472-3409
                May 2021
                July 10 2019
                May 2021
                : 53
                : 3
                : 480-502
                Affiliations
                [1 ]UCL Institute for Innovation and Public Purpose, UK
                Article
                10.1177/0308518X19862811
                18cf4ffc-9c06-4284-83b7-c5437b58c3e3
                © 2021

                http://journals.sagepub.com/page/policies/text-and-data-mining-license

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