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3 points•0 comments•4d ago•by littlexsparkee•kcl.ac.uk ↗

New study reveals why housing booms and busts are built into the system

A study examining housing markets in 23 OECD countries from 1990 to 2019 finds that booms and busts are more dramatic than the long-run trend, with prices rising about 6% a year during booms versus 2.6% on average. The study attributes cycles to institutions and policies that encourage speculative behavior, notably low capital gains taxes and landlord-friendly rental regimes. Social housing, rent controls, and tenancy protections are linked to more stable prices, while mortgage credit alone is not the main driver of volatility; housing supply elasticity dampens cycles only modestly.

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