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Why are homes unaffordable from London to Sydney?

Steve Keen shows why the standard “supply & demand” story misses the engine underneath modern housing bubbles: bank-originated mortgage credit. Using long-run BIS datasets, Steve tracks how real house prices decoupled from consumer prices after the 1980s as banks ramped mortgage lending. The kicker: it’s not just the level of mortgage debt that drives prices — it’s the change in the change of mortgage debt. That credit pulse explains booms, busts, and today’s squeeze.

What you’ll learn

• Why real house prices were flat for a century… then went vertical after the 1980s

• How bank lending (not “savers’ deposits”) creates new purchasing power for housing

• The critical driver: ΔΔ Mortgage Debt → Δ Real House Prices (UK, US, Australia, more)

• Why simple correlations mislead — and why differencing reveals the true causal link

• How rising inequality and speculative demand amplify bank-fueled price cycles

• Policy levers that actually bite: credit guidance, LTV/DTI caps, and curbing mortgage speculation

Key takeaways

• Housing became a credit-fueled asset: prices outran CPI and wages because banks created the demand.

• The credit impulse (change in the change of household debt) best explains house-price swings.

• Countries without a visible “crash” can still be in an oversized, fragile credit cycle.

• Taming bubbles means steering bank credit toward productive uses — not bidding wars for existing homes.

Policy ideas discussed

Credit guidance for banks: prioritize business working capital & durable goods; restrict mortgage speculation.

Macroprudential limits: tighten LTV/DTI during upswings; countercyclical buffers that lean against credit booms.

Re-align incentives: discourage flipping/empty-home speculation; reward new supply without turbo-charging land prices.

Measure what matters: track private-debt ratios and the credit impulse alongside CPI/unemployment.

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About Steve Keen

Steve Keen builds accounting-consistent, data-driven models of money, debt, and instability. Creator of Minsky and Ravel, he replaces classroom myths with the operational mechanics you can simulate and test.

Get exclusive Cyber Monday bonuses including Unlimited Ravel use (the software I use in this video), Q&A calls with me, 100-Day Guarantee and other exclusives at 👉 https://cyber.stevekeen.com

⌛️ Ends on Monday Dec 1st 11:59PM EST.

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