FET #65: Reaction to "There is no housing crisis"

Is Australia’s housing market REALLY functioning normally? Regular co-host Jonathan Gadir pushes back on my recent statements about the housing market doing exactly what we should expect it to do in a conversation with Josh Szeps at his Uncomfortable Conversations podcast. I also respond to Steve Keen’s idea that the secret to lower home prices is regulating access to credit, such as with tighter rules limiting loan sizes to a function of current rent or value, which he expresses in this video. My basic view is that this can certainly change the speed of price adjustment in the housing market by preventing some trades, possibly dampening a bubble, but it won’t change the overall long-term average price level. It might also inadvertently make first home buying harder, not easier, which was a frustration of the strict credit controls pre-1980s. I explain more about the economic forces that constrain what housing markets can do in my book The Great Housing Hijack. This is why I argue that rather than trying to fight these forces, simply side-step them with subsidised non-market housing for the groups we think should be able to access it. As always, please like, share, comment, and subscribe. Thanks for your support. You can find Fresh Economic Thinking on YouTube, Spotify, and Apple Podcasts.Theme: Happy Swing by Serge Quadrado Music—Creative Commons Licence CC BY-NC 4.0Interested in learning more? Fresh Economic Thinking runs in-person and online workshops to help your organisation dig into the economic issues you face and learn powerful insights. This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.fresheconomicthinking.com/subscribe