As the housing crisis in Britain’s most prosperous cities has grown, so has the wealth of their homeowners. While local demand for housing is driven by the strength of the local economy, supply, in contrast, does not respond to demand or economic performance. The housing shortages caused by these planning failures push up house prices in growing cities. This drives housing equity growth for a few existing homeowners, fuels increasing housing costs for renters and first-time buyers, widens regional inequality, and destabilises the national economy and the financial system.
This report explores the relationship between urban economies and housing wealth in England and Wales.
Addressing wealth inequality requires reconnecting the supply of new homes to housing demand in city economies, reducing the subsidies homeowners receive from the Government and exploring how other asset classes could allow households to build wealth.
The authors would like to thank the Private Debt Project for the support which has made this research possible.