By Joanne Cutler of the Bank’s Structural Economic Analysis Division.
Recent developments in the housing market have prompted increased interest in its links with the wider economy. After summarising the historical trends in the UK housing market—compared with those in other major industrial countries—over the past 50 years, this article looks at those links in recent years, and discusses a number of differing explanations of them. It also considers how the relationship might be affected by an environment of sustained low inflation.
The housing market and the economy