Challenges of the Housing Economy
An International Perspective
Real Estate Issues Series

This timely book addresses key challenges faced by policy makers and the house-building industry in a post-credit crunch world. It examines the implications for households, the housing market, the economy, as well as for government's policy choices.

Challenges of the Housing Economy: an international perspective brings together experts from around the world to examine recent housing market trends. The contributions reveal common long-term trends in housing markets worldwide. Despite differences in supply conditions and the role of planning, there is a trend toward rising house prices that has created significant barriers to home ownership for young households while increasing the wealth of older generations. The financial crisis had a differential impact on housing markets but in many countries where mortgage finance became severely constrained, house prices fell and there was a dramatic fall in housing construction. The falls in house prices in these countries have ostensibly improved affordability but the housing markets have been dominated by the lowering of loan to values applicable to new mortgages which has further raised the hurdles to potential first-time purchasers.

At the same time as young households are increasingly rationed out of owner-occupation, public sector expenditure cut-backs in many countries result in limited new social housing. Instead, value for money imperatives will mean new funding models for affordable housing that require greater use of public-private partnerships. The private rented sector could potentially meet the demand for the new generation of long-term renters. However, there are doubts - in the UK at least - that this sector will be able to expand significantly or provide an appropriate type and standard of housing.

This is an essential advanced text for students and researchers of land economy and land management; property and real estate; housing policy; and urban studies.

Contributors xiii

Glossary xvii

1 Introduction: The Housing Economy and the Credit Crunch 1
Colin Jones

The Irish example 2

International historical housing market context 3

Dynamics of the housing market 6

Housing market and the economy 9

Origins and impact of credit crunch 11

Objectives and structure of the book 18

Summary 23

2 US Housing Policy in the Era of Boom and Bust 25
Harry W Richardson, Gordon F Mulligan and John L Carruthers

House prices from 1995 to present 27

Housing reforms for the future 35

Conclusion 44

3 Housing Bubbles and Foreclosures that Follow: The Case of Las Vegas 47
Craig A Depken II, Harris Hollans and Steve Swidler

Data and definition of property flipping 48

Anatomy of boom bust market dynamics 50

Foreclosure activity after the bubble burst 51

Concluding thoughts 55

4 Unemployment Risk, Homeownership and Housing Wealth: Lessons from Bubble Aftermath in Japan 58
Yoko Moriizumi and Michio Naoi

Housing bubble and burst in Japan 60

Unemployment risk and homeownership 68

Housing wealth and consumption 74

Conclusion 81

Appendices: Details of statistical analysis 83

5 The Changing Nature of Household Demand and Housing Market Trends in China 90
Edward C Y Yiu and Sherry Y S Xu

Introduction to the housing market 91

Population growth hypothesis 94

Income growth hypothesis 96

Monetary policy hypothesis 100

Conclusions 105

6 Structural Sustainability of Homeownership in Australia 108
Judith Yates

Australia’s housing system 110

Future projections of homeownership sustainability 119

Conclusions 126

7 Impacts on Wealth and Debt of Changes in the Danish Financial Framework Over a Housing Cycle 128
Jens Lunde

Dynamics of recent Danish housing market cycles 130

Changing structure of owner occupation 133

Changing mortgage finance and indebtedness 135

Financial stability of owner-occupied households 140

Conclusions 151

8 Market Stability, Housing Finance and Homeownership in Germany 153
Peter Westerheide

Characteristics of the German housing market 154

German housing price trends: an international comparison 158

Housing demand and housing investment 160

The contribution of the financing system 162

The impact of the financial crisis on the German housing market 164

High down-payment constraints and stability: contradicting aims? The role of savings behaviour 164

Conclusion and outlook 168

9 The Responsiveness of New Supply to House Prices: A Perspective from the Spanish Housing Market 170
Paloma Taltavull de La Paz

Housing supply trends 171

Spanish housing market cycle pre and post the fi nancial crisis 174

Estimation of the supply elasticity of new houses 179

Summary and conclusion 184

Appendix: Details of statistical analysis 186

10 The UK Housing Market Cycle and the Role of Planning: The Policy Challenge Following the Financial Crisis 195
Colin Jones

Housing market context 196

Anatomy of the housing market boom and bust 197

Evolution of the planning framework in the UK 205

Recent planning policies 207

The planning policy consequences of the recession and beyond 212

New planning agenda 213

Conclusions 214

11 Developments in the Role of Social Housing in Europe 216
Christine M E Whitehead

Looking back: social housing and the welfare state in Europe 217

Outcomes 226

Future developments 231

Conclusions 233

12 Delivering Affordable Housing in the UK 235
Kenneth Gibb

Historic social housing context in Scotland 238

Background to the current Scottish affordability challenge 239

Assessing the emerging models 245

Concluding discussion 252

13 The Private Rented Sector As a Source of Affordable Housing 255
Michael Ball

The private rented sector within the housing system 256

Potential policy developments 265

Potential attraction of large investors 272

Summary and conclusions 278

14 Conclusions: The Challenges Ahead 282
Colin Jones

The credit crunch 282

Commonalities and challenges 284

The future 290

Concluding remarks 292

References 294

Index 312

Colin Jones is Professor of Estate Management, School of the Built Environment, Heriot-Watt University

Neil Dunse is a Reader in Urban Studies, School of the Built Environment, Heriot-Watt University

Michael White is Professor of Real Estate Economics at Nottingham Trent University