Housing market distortions will hinder economic growth

Significance

High home ownership has economic benefits but is correlated with high prices. Allied with reduced mortgage availability and higher borrowing costs, this is now exerting a polarising effect within economies, undercutting consumption and labour mobility.

Impacts

• Governments will channel funds to help home-buyers afford high prices rather than help home-builders build more, keeping prices elevated.
• Labour mobility can be impeded when property markets slow, and when rising prices convert into rising rents for lower-income households.
• Recent financial pressures on mortgagees and renters are reducing the quality and energy efficiency of the housing stock in some nations.
• Housing shortages and affordability problems are a rallying-point for populist parties, especially those with anti-immigration platforms.