Boom Bust: House Prices, Banking and the Depression of 2010
Language: English
Pages: 304
ISBN: 0856832545
Format: PDF / Kindle (mobi) / ePub
Using the United Kingdom as a case study, this well-researched account shows how, for more than 200 years, a remarkably regular 18-year cycle of boom and bust can be traced to the peaks and troughs in land prices. This exploration reveals how governments, during the upswing of the cycle, are complicit in encouraging a belief that property prices will continue upwards indefinitely because of their skilled management of the economy and attributes the current crises to public policy on both sides of the Atlantic. An alternative plan to neutralize the next boom—one that would lead to a more stable and environmentally friendly economy with a more equitable distribution of wealth—is also presented.
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club members. That was deemed to be fair to everyone, for the present value, at the commencement of the Society, of the £120 to be realised at its conclusion, or (what is the same thing) of the subscription of 10s. a month by which that £120 is to be raised, is £60. The club assembled members by advertising in local newspapers. The money collected from the first month’s subscriptions was sufficient to stake one person with the sum that was needed to build the first house. But what about those
observation to Ronald Banks. In the 1950s, property owners were still selling buildings with long ground leases that did not include rent review clauses. 14 The Emerging Residential Investment Sector, London: FPDSavills, Summer 1988, p.2. 15 The Office of Federal Housing Enterprise Oversight (op. cit., p.6) claimed that the housing market took off in 1994. If investors and home-buyers accepted this date, they would conclude that the rise in prices would end in 2008. But data from financial
members met in pubs metamorphosed into building societies in Britain and savings and loans institutions in the United States. Working people deposited their savings with them, for safe-keeping, but – unwittingly – these institutions were drawn into an economic routine that undermined their mission. Boom Bust 7/1/10 11:19 Page 98 98 Boom Bust People aspired to homes that afforded the security of the rock-solid castles of their dreams. But as house prices soared, for many of them mortgages
and devastation swept the land, and for the third time in 23 years the Bank Charter Act of 1844 had to be broken and the Bank of 36 England ordered to issue notes in excess of its legal powers.’ But this time, there was a new spin on what had become a recurring refrain. In 1875, Parliament appointed a Select Committee to investigate speculation in foreign lands. ‘In the three previous years it was estimated that some £60m of British money had been lost in foreign 37 speculation …’ The bankers, in
three decades, the average price of houses in Britain escalated at a rate that eclipsed those in other European countries. Ireland and Spain were the only two countries with comparable increases. Germany experienced virtually no increase in the real price of accommodation, which helps to explain the post-war economic ‘miracle’ that it enjoyed. ACCORDING TO TABLE 1:2 Real House Price Rises, 1971-2001 1 UK Germany France Italy Spain Netherlands Belgium Ireland Sweden Finland Denmark Average