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  • Anforme Why is housing in the UK a distorted market?

Anforme Why is housing in the UK a distorted market?

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Nigel Watson, Head of Economics and Business Studies at St Catherine’s School, Bramley, Surrey, explains how factors on both the supply side and the demand side result in the opposite of a free market.

Summary of contents:

  • The UK housing market is not a free market because government and central bank intervention has affected both demand and supply, creating a dysfunctional market.
  • Policies use to restrict the supply of housing, including lender forbearance, mortgage interest support, mortgage rescue schemes and restrictive planning laws.
  • Policies which have artificially boosted housing demand, including low interest rates, housing benefit and financial deregulation.
  • Conclusions: Government initiatives have prevented a crash of the magnitude seen in some other countries, yet house prices in the UK are still well out of line with household incomes.


This article is featured in ET volume 19 issue 2.

Nigel Watson, Head of Economics and Business Studies at St Catherine’s School, Bramley, Surrey, explains how factors on both the supply side and the demand side result in the opposite of a free market.

Summary of contents:

  • The UK housing market is not a free market because government and central bank intervention has affected both demand and supply, creating a dysfunctional market.
  • Policies use to restrict the supply of housing, including lender forbearance, mortgage interest support, mortgage rescue schemes and restrictive planning laws.
  • Policies which have artificially boosted housing demand, including low interest rates, housing benefit and financial deregulation.
  • Conclusions: Government initiatives have prevented a crash of the magnitude seen in some other countries, yet house prices in the UK are still well out of line with household incomes.


This article is featured in ET volume 19 issue 2.

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