The End of Majority Home-ownership: The logic of continuing decline in a post-crash economy

Abstract

Prior to the Credit Crunch some economists denied the existence of a housing market bubble because the fundamentals supporting inflation were right. Their analysis relied upon assumptions about households as purchasers as the main drivers of the market (transaction volumes and value). The financial crisis and its fallout have shown us that the beliefs and behaviours of other tightly knit groups such as lenders and developers, or more loosely affiliated groups such as landlords, are also crucial to the operation of markets. Weber would have referred to these as “social carriers” in his multi-causal explanations of society. This paper argues that household driven models of “fundamentals” no longer explain the housing market, if they ever did. The current rise of the private landlord and the decade long decline of home-ownership is the beginning of the return of minority ownership of the UK housing stock, a long term change resulting from changed interests and perceptions among the “social carriers” affecting UK housing markets. This has huge implications for almost all aspects of social, welfare and (probably) economic policy.