New Economic Thinking and Real Estate

Danny Myers is an economist who has taught built environment students at undergraduate and post-graduate levels in the UK and abroad. He is an experienced lecturer and author from the Department of Construction and Property at the University of the West of England, and the Department of Architecture and Civil Engineering at the University of Bath. His recent research supported Kalle Lasne, the founder of the Occupy movement.

• Foreword viiiIntroduction: Setting the Scene 1The storyline 3Hindsight is a wonderful thing 5The writing on the wall 7PART A RESOURCE CHOICES 111 Basic Economic Principles 13Definition of economics 14Resources (or factors of production) 15Income and wealth 19Investment 20Property in a resource context 22History of economic thought 25Food for thought: The problems of inequality 292 The Language of Profit 32It’s all about profit 33The residential developer’s dilemma 34It’s all about yields 37Timing is everything 38Socially responsible investment 41Costs and price 42The circle of blame 45Food for thought: Is profit the measure of everything? 453 Real Estate Markets 49Common sense price signals 50The Marshallian Cross 52The concept of equilibrium 54Property markets 56The basics of demand 60Demand for housing 61Demand for commercial property 64Demand for government property 65The basics of supply 66The stock of housing 67Stock of commercial property 70Stock of government buildings 72Supply and non]price determinants 73Know your markets 75The unethical market? 77Food for thought: Behavioural real estate economics 79PART B FINANCIAL SYSTEMS 834 The Macroeconomy and Financial Flows 85The circular flow model 86The modern flow of funds model 88The perils of debt 91Food for thought: Flow of funds – what goes around comes around 935 Central Banks and Monetary Policy 99Ideology: In whose interests? 101What goes on in the traditional banking sector? 102The fairytale story of banking 103The market for derivatives: Weapons of mass destruction 107Alphabet soup 108Specialised real estate funding options 111Central banks 113Monetary policy before 2008: The conventional approach 113Monetary policy since 2008: The unconventional approach 118Food for thought: Cosmetic accounting 1246 The Financial Recession 127The language of recessions and recovery 128A new world 129Herman Minsky (1919–1996) – ahead of his time? 131Why did no one see it coming? 134Let the facts speak for themselves 134Central bank: Lender of last resort 137Where to look in the future 138Food for thought: Where is the next crisis coming from? 140PART C MEASURING AND FORECASTING 1437 Central Government and Fiscal Policy 145Macroeconomic targets 146Central government 152Fiscal policy 154Austerity economics 159Food for thought: An ageing population 1618 Measuring and Forecasting Economic Activity 165Some general principles to watch out for 166Measuring economic growth 168Measuring income per head 170Measuring income distribution 172Measuring inflation 174Measuring unemployment 179Measuring international transactions 183Measuring business fluctuations 186Forecasting the economy 189Forecasting property markets 191Food for thought: The new (High Street) economy 194Afterword 199Glossary 202Webnotes 210References and Recommendations 215Index 222