Housing markets and policy in the UK and the USA: A review of the differential impact of the global housing crisis

Abstract

Purpose

This paper aims to examine how the exogenous shock of the global financial crisis has had a differential impact on the housing markets of the USA and UK.

Design/methodology/approach

The paper begins by examining the nature and dynamics of the global financial crisis. It presents a detailed comparison of institutional and housing market characteristics in each country. A particular focus is the differences in mortgage funding and subprime lending trends over the decade leading up to the financial crisis.

Findings

The analysis demonstrates the distinctiveness of the recent housing cycles and the geography of the downward price adjustments. Relative unemployment rates play a key role in these outcomes. Despite the different dynamics of the boom and bust, there is a common legacy in terms of the collapse of house building, repossessions/foreclosures and falling home ownership rates. The short-term policy responses by both governments addressed the same target issues in alternative ways but with different outcomes. Longer-term solutions are still being debated in both countries.

Originality/value

Innovatory insights are provided by the comparison of the sub-national spatial pattern of the recent house price cycle in two countries.

Citation

Jones, C. and W. Richardson, H. (2014), "Housing markets and policy in the UK and the USA: A review of the differential impact of the global housing crisis", International Journal of Housing Markets and Analysis, Vol. 7 No. 1, pp. 129-144. https://doi.org/10.1108/IJHMA-10-2012-0052