Housing and the Wider Economy in the Short and Long Run

Abstract

Over the course of the twentieth century housing wealth in the UK has risen dramatically; recently it has become easier for households to borrow against that wealth. The process by which real housing wealth has growth—through long-term increases in the relative price of homes and substantial real investment in the stock of dwellings—has implications for the impact of financial liberalisation upon saving future house prices and bequests of housing. This article takes a long-term perspective on housing in the UK in order to answer questions of great practical importance. The interaction between savings, population changes, bequests of properly, housing investment and house prices is analysed and the forces driving these variables into the next century are assessed.