Inflation and house prices. In the quarter of a century since 1996, UK house prices have risen 161%: from around 4.5 times average household income then to around 8 times now. Despite being a major factor affecting real incomes and standards of living, house prices are not included in the Consumer Price Index, the standard indicator to measure inflation.

  • House price inflation and inequality. Economist Gary Stevenson has produced an explainer video on house price inflation, its impact on the cost of living, and the wider economic implications if only certain sections of the population can afford to own their homes: “As ordinary families lose their properties and kids from richer families are able to buy them, inequality gets even worse, driving house prices up further still. This creates a worsening spiral which makes housing increasingly unaffordable to ordinary people”.
  • Housing data. The Resolution Foundation publishes a dashboard of data about housing and living standards, updated quarterly alongside its Housing Outlook. 

Home ownership and ‘generation rent’. House price inflation is linked to a sharp fall in home ownership, especially among young people and families with children. The Resolution Foundation’s report Hope to Buy analyses trends in home ownership among those aged under 35. Nationally, home ownership in this group fell from 51 per cent in 1989 to 28 per cent in 2019. In some regions the fall has been greater. 

  • Locked out. The National Housing Federation’s assessment of housing in England finds that rising house prices and rents and an overall shortage of homes have left than 3.6m people living in overcrowded homes, 2.5m who can’t afford their rent or mortgage, and 2.5m adults living with parents, an ex-partner, or friends because they can’t afford a place of their own. 
  • Intergenerational inequality. Nearly half of all housing wealth is now owned by those aged over 65, the FT reports. Political economist Keir Milburn explains in this short video the “political generation gap” between young and old, mediated by property ownership: “The material interests of older cohorts might be leading some of them to look away from the pressing crises of the present.” 
  • Rent and class. Autonomy’s study on occupation, rent and class features interactive charts which unpack the relationship between occupation and housing status, particularly renting.
  • Race inequality in housing. An article for Bloomberg illustrated the “ugly truth about the road to prosperity in the UK”, citing ONS data showing that the median black household has accumulated zero wealth through home ownership over the last decade, compared to £115,000 for the average white household. 

Stoking house price inflation? Over the last decade, and further since the onset of the pandemic, the Government has sought to incentivise home ownership by subsidising borrowing. At the same time, the Bank of England’s ‘quantitative easing’ programme (in which it buys government and corporate bonds to increase the flow of lending) has caused house prices, alongside other assets, to inflate. Positive Money’s Danisha Kazi explains why the “government-engineered housing boom will hold back the recovery” and increase inequality. The former Bank of England chief economist Andy Haldane described the UK housing market in 2021 as being “on fire”

Meeting housing demand. To meet unmet housing demand an estimated 345,000 new homes are needed per year in England alone. The level of housebuilding has increased in recent years but is still far below this level. The UK Collaborative Centre for Housing Evidence has examined the relationship between housing supply and prices, and what the impact on prices would be if more homes were built.

Controlling house prices and rents. Many economists argue that building homes, though important, will not control house prices or rents. The primary problem is on the demand side, where policy support for home ownership, along with the increasing use of housing as an asset (including the now major rent-to-buy market), have forced prices upwards. In their book Rethinking the Economics of Land and Housing, Josh Ryan-Collins, Toby Lloyd and Laurie Macfarlane explore the relationship between the financial system, housing and land: their argument is summarised in this review for the LSE Review of Books.

‘Rentier capitalism’? Consistent house price inflation is one of the phenomena which have led the western economic model (particularly in the UK and US) to be described as ‘rentier capitalism’. By this is meant, economies dominated by a concentrated distribution of property ownership, where individuals and businesses with market power are able to extract ‘rents’, or unearned income. Recent books by Brett Christophers and Guy Standing, reviewed here and here, have set out the evidence and arguments. (Here is a short video explainer of the concept.) For a more detailed analysis, read Christine Berry’s series for Autonomy on the ‘landlord economy’: “an economic system built on rising asset prices (especially in housing), and a political system structurally favouring their owners”.

More resources. For more resources on housing market reform and the wider economics of land and housing, visit our Resource Bank page.

Weekly Updates

Inflation and energy

“Temporary price stabilisation mechanism” for rising energy bills? The FT reported that “the Treasury is exploring a radical intervention in the power market”, where the government would make payments to energy suppliers when wholesale gas prices pass a certain threshold to protect households from higher bills. The Treasury hopes to recoup some of the funding when and if wholesale gas prices drop “below the agreed level”. (Gas prices are predicted to stay high for the next two years)

The energy transition won’t be smooth. Fatih Birol, Executive Director of the International Energy Agency, explained that, though “today’s market fluctuations cannot be traced back to climate policies, that does not mean that the road to net zero emissions will be smooth”, making the case for renewable energy and energy efficiency investment. (For more on the importance of energy efficiency see this thread). 

Tax and inequalities

The case for a wealth tax. Oxfam’s annual report on global inequality finds that the world's 10 richest men doubled their wealth over the course of the pandemic. The OECD has found that more than 6-% of citizens in OECD countries want their government to tackle inequality through higher taxes

Global minimum corporation tax: consultation on Pillar 2.  Last week the UK government launched a consultation on the domestic implementation of the 15% global minimum corporation tax for large multinationals. (Deadline 4th April.)

Legislative and policy changes threatening human rights. The Institute for Race Relations is publishing articles from a five-part series each day this week to explain government moves in key policy areas which threaten human rights. Monday’s criticised the Nationality and Borders bill (summary thread here) and other topics this week cover ministerial impunity and the rule of law, free expression and equalities and human rights. A Twitter thread from the Runnymede Trust outlined the “onslaught of legislation in parliament this month” threatening the civil rights of ethnic minority people.


Jobs recovery. The UK recovery continues to be marked by labour market unevenness, according to new analysis of job posting figures from Indeed. The effect of Omicron on the hospitality sector is highlighted as one of the key factors impacting recent figures.

4 Day Week. Autonomy have launched a new Four-Day Week pilot programme across the UK, working in partnership with 4 Day Week Global, Cambridge University, Oxford University, Boston College, and the 4 Day Week UK campaign. It was announced that the UK branch of the camera Canon has joined the pilot

Worker ownership. Labour backbencher Christina Rees has introduced a new 10-minute rule bill that would introduce a UK version of the Italian Marcora law, allowing workers to buy out struggling firms.

The impact of poor sick pay. Next has joined IKEA and Morrisons in announcing they will cut the sick pay of unvaccinated staff. A new study on the impact of low sick pay by the TUC found over 250,000 workers in private companies were self-isolating last month, with 210,000 having to rely on SSP and 57,900 receiving no sick pay at all.

High earners? New polling commissioned by the New Statesman has found that most of the public consider £40,000 a high salary, while under £20,000 is considered a low salary by a majority. (The median level of full-time earnings is now £31,000.) The polling also found that the public consider salary a more meaningful indicator of social class than inherited wealth.

Local economies

IPPR State of the North report. IPPR North has this week published its annual State of the North report, setting out how far we are from achieving ‘levelling up’. (Twitter thread here.) IPPR’s Executive Director Carys Roberts called for further devolved power to ‘unlock this potential’

Covid deaths in ‘left behind’ areas. The APPG for ‘Left Behind’ Neighbourhoods has published a report on the health implications of living in deprived and ‘left behind’ areas. The report found that people in these areas were 46% more likely to have died from Covid-19 than in the rest of England. The report suggests incorporating a strand on health inequality reduction in the government’s levelling up strategy, including increased NHS funding in these areas. 

Cuts to bus services. Local bus services across the country are threatened with a funding cliff edge, says Silviya Barrett of the Campaign for Better Transport. With bus use in decline due to the pandemic, private operators are finding that many routes are not commercially viable. To compensate for loss of revenue, the government has provided support via the Covid-19 Bus Service Support Grant, but this is due to expire at the end of March. 

Mapping ownership in Manchester. Researchers have used Freedom of Information Requests to map the privatisation of public land in Manchester. Dr Tom Gillespie and Dr Jonathan Silver, in partnership with Greater Manchester Housing Action, have created the map to improve transparency and debate around public land use in the city

Climate change

Government taken to court on net zero. Friends of the Earth and ClientEarth have launched legal action against the government, arguing that the Net Zero strategy does not contain the policies needed to achieve emissions reductions and is therefore in breach of the government’s legal obligations.

Green New Deal. The New Economics Foundation has published a new report which sets out a five point plan for how government can simultaneously tackle the challenges of levelling up and decarbonisation through a Green New Deal. The report launch is accompanied by a video which explains the interlinkage of these two agendas. NEF’s Frank van Lerven summarised the argument in a Twitter thread.

Climate risks. The Government has published a new climate change risk assessment, which finds that a temperature rise of 2 degrees would result in economic damage of 1% of GDP by 2045, with eight individual risks exceeding £1bn per year in damage. Joss Garman, UK Director of the European Climate Foundation, pointed out that the costs of climate change impacts to the UK are now estimated to be “more than all of the climate policy costs combined”.

Regulation and competition policy

Carillion, competition policy and audit reform. KPMG has admitted to misleading regulators in the audit of Carillion at a tribunal by the Financial Reporting Council. Lord Prem Sikka explains why the “Big 4” accounting firms’ “power must be curtailed. They need to be broken-up. Their partners need to be made personally liable for the harms they inflict.” 

EU poised to curtail power of Big Tech. France has said it will use its six months presidency as head of the Council of the EU to advance the Digital Services and Digital Markets Acts. President Macron said: “The French presidency must be a moment of truth for the regulation and accountability of digital platforms”.