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Housing, debt and the economy: a tale of two countries

  • John Muellbauer (a1)

Abstract

In housing affordability levels and volatility, there could hardly be a greater contrast than between the UK and Germany. Differences in history, institutions and policies are explored in this paper. Residential housing supply has been far more expansionary in Germany and mortgage credit more tightly regulated. A sensibly regulated rental market and stable German house prices have combined to leave the rental sector with over half of tenures. Policy failures in the UK have resulted in widening intergenerational inequality, increased social exclusion, adversely affected productivity and growth and raised the risk of financial instability. Policy lessons are drawn for the UK, which go far beyond the remit of the immediately responsible Ministry of Housing, Communities and Local Government.

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This paper draws on the Anglo-German Foundation lecture with the same title given at the Berlin-Brandenburgische Akademie der Wissenschaften in May 2017. I am indebted to Janine Aron for extensive comments, Felix Geiger of the Bundesbank and Manuel Rupprecht of the University of Muenster for help with German data, Yanitsa Kazalova and Andrew Goodwin for help with UK data and economists at the former DCLG and at the Resolution Foundation for useful discussions but take full responsibility for views expressed.

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Housing, debt and the economy: a tale of two countries

  • John Muellbauer (a1)

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