Anne Pettifor calls herself an economist, does she?

Everyone – from the government, to housing charities, to housebuilders – has bought into the conventional wisdom that the dysfunction that racks our housing market is a matter of demand and supply. We’re not building enough houses, so house prices have been sent rocketing, taking home-ownership out of reach for growing numbers of young people. But in reality, our housing problems are not a simple feature of supply and demand. Rather, our housing market has a bitcoin problem.

What has bitcoin mania got in common with house prices, especially in the capital? For starters, both are speculative bubbles. Vast sums of money have been poured into finite supplies of bitcoins and London property. Both have consequently exploded in value, albeit over different time periods. And so both have become financialised assets that deliver capital gains far in excess of people’s ability to earn income from work, or from investment in the real economy. And as with bitcoin, so with London property: speculators are convinced that prices will continue to rise for ever.

Yes. So, if we expand the supply what happens to the price?

What’s more amusing is that, as the property industry itself is pointing out, prices are falling in London. You know, exactly that thing which Ms. Pettifor tells us cannot happen?

16 comments on “Anne Pettifor calls herself an economist, does she?

  1. If a Guardianista understood Economics, they wouldn’t be writing for the Guardian.(apology, von Mises)

  2. Christ almighty. “For starters, both are speculative bubbles. “. But speculative bubbles depend on confidence that the price will rise and a great deal of that is supply not rising (or at least not much). It’s why there’s so much speculation in Warhols, beanie babies, e-types and fine wine. No-one can make more ’61 Latour.

  3. Shocking speculators. Great article on the guardian complaining about all of the luxury towers that have been built and the developers are now finding that they may have been overoptimistic on prices they will get.

    One conclusion would be that this is fantastic as all kind of high end real estate has been built, much of it tall (which is often a vanity project) and thus a great use of space. Whilst the developer might make a loss on his capital investment, now it exists, prices will reset down and the high running costs can comfortably be covered by whoever lives there (unlike some of the council tower blocks). People moving into that space are moving out of somewhere else so we have housing freed up elsewhere.

    No. It is a disaster as apparently all of these will sit empty until the end of time as the asking prices are too high. Thus we should put homeless people in them.

  4. 1.01 that she commutes into London from somewhere like Surrey. She wants justifications for why other people should pay more of her train fare, and why there should be no increase in the numbers living in viewing distance of her gaff.

  5. ‘Vast sums of money have been poured into finite supplies of bitcoins and London property.’

    Hmmm . . . finite supply. She even said it.

  6. No-one can make more ’61 Latour.
    There’s a bloke in France printing labels and filling bottles with Algerian plonk for the Chinese market even as we speak.

  7. “prices are falling in London”: far enough, I hope, that we can buy a riverside penthouse flat as a pied-à-terre. Mind you, that would have to be rather an astonishing fall.

    How are prices in Paris? Are we still excluded from owning a pied-à-terre on the Île Saint-Louis?

  8. @ Chris Miller
    I drank, in the late ’70s and early ’80s, all the ’61 Claret that I bought. Even Chateau Latour would be well past its best by now.

  9. High prices give an incentive to production. Turns out it’s easier to step up property production than Bitcoin production. Hence property prices will fall back in any case, Bitcoin will fall if people decide it’s worth less than the asking price.

  10. “Yes. So, if we expand the supply what happens to the price?”

    London has the greatest supply of houses in the UK.. so it’s where prices are lowest, yes?

  11. “London has the greatest supply of houses in the UK.. so it’s where prices are lowest, yes?”

    Wow. Suggest you engage brain. Price is a function of supply and demand, not just supply!

  12. The housing market is dysfunctional because of inept government policy, largely on immigration, land availability and planning, and the serried ranks of lobby groups and parasites that are taking their cut

  13. “Suggest you engage brain. Price is a function of supply and demand, not just supply!”

    Yes. And in cities like London, supply, self-evidently, increases demand. And the net impact is, again, self evident.

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