When a Housing Boom Turns to Bust

About this episode

The episode explores the transition from a housing boom to a bust, examining the economic implications and historical lessons.

A three-bedroom "dunger" in New Zealand with peeling paint and boarded-up windows sold for 1.81 million dollars at the peak of the boom. A few years later, prices had fallen by as much as a third in real terms, recent buyers were trapped in negative equity, and thousands of construction firms had gone under. In this video we look at how a national housing boom turns into a bust, why house prices became so unaffordable in the first place, and what it means for an economy when the family home stops being a place to live and becomes a leveraged investment.Along the way we cover the interest-rate math behind home affordability and why falling mortgage rates inflated prices for forty years, the politics of why governments keep house prices rising, why high housing costs drive young workers to emigrate, and the lessons from past property crashes in Japan, the United States, and Ireland. We also look at Henry George's argument for a land value tax, Edward Leamer's "Housing IS the Business Cycle," and why an efficient property market matters for the whole economy. Whether you're in the US, UK, Canada, Australia, or anywhere else watching house prices climb out of…

People in this episode

Host: Patrick Boyle

Topics covered

• housing market
• economic impact
• negative equity
• interest rates
• land value tax
• property investment

Keywords

• housing prices
• negative equity
• interest rates
• property market
• economic dynamics
• housing affordability

Mentioned in this episode

Places: New Zealand, US, UK, Canada, Australia

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