Political manipulation of money at root of housing crisis
The narrative running through political and media characterisation of the housing market goes like this: ‘ever increasing demand for houses, turbo-charged by foreigners looking for a safe-haven, has been met by limited supply causing prices to rise dramatically. Fortunately, our politicians and the City are on hand to ensure cheap mortgages are available to help you onto the property ladder to prosperity.‘ Is it not also plausible that the rapid expansion of cheap mortgage credit has been a causal driver of house price inflation rather than a consequence of it? On the face of it you might expect widening access to ever cheaper money simply means more people can buy houses more cheaply. But if the number of houses doesn't increase to meet demand then more people with more money chase the same properties and prices rise rapidly. Without an excess of supply, above and beyond demand, there is no downward pressure on prices. That is not to say an increasing population and o