In the paper, entitled ‘Comparing Housing Boom and Mortgage Supply in the major OECD Countries’, the pair compared the economic crisis of the 1980s to the recent recession.
It was concluded: “On balance we reject the idea that the recent [housing] boom was in some way unique and hence the key cause of the crisis.
“This poses a challenge for the existing narrative claiming the housing boom was the unique and key determinant of the crisis.
“We suggest that other factors distinguishing the cycles that warrant further research include the initial level of debt/income and the related impact of inflation, the impact of lower interest rates in the recent boom and global contagion via liquidity in the recent episode; the ready availability of credit from mortgage bond issuance.
“Also changing owner occupation rates and patterns of population densities may have had a markedly different effect across the booms and of course the behaviour of banks and financial markets differed.”
From 1985 to 1989 UK house prices increased by 71%, while this compared to 49% between 2002 to 2006.
Afterwards prices crashed by 14% from 2007 to 2011 and 21% from 1990 to 1994.
Armstrong said: “We’ve had similar housing booms statistically and you cannot distinguish between them.
“That doesn’t explain it.”
