New Economic Thinking and Real Estate offers a modern and distinctive approach to forecasting and understanding property markets. With this book, students will develop an intuitive ability to interpret economic indicators and acquire the confidence to assess property markets. The book is divided into three parts: Part A: Resource choices - deals with microeconomics; Part B: Financial Systems - seeks to make sense of the macroeconomic scene and Part C: Measuring and Forecasting.
Foreword viii Introduction: Setting the Scene 1 The storyline 3 Hindsight is a wonderful thing 5 The writing on the wall 7 PART A RESOURCE CHOICES 11 1 Basic Economic Principles 13 Definition of economics 14 Resources (or factors of production) 15 Income and wealth 19 Investment 20 Property in a resource context 22 History of economic thought 25 Food for thought: The problems of inequality 29 2 The Language of Profit 32 It s all about profit 33 The residential developer s dilemma 34 It s all about yields 37 Timing is everything 38 Socially responsible investment 41 Costs and price 42 The circle of blame 45 Food for thought: Is profit the measure of everything? 45 3 Real Estate Markets 49 Common sense price signals 50 The Marshallian Cross 52 The concept of equilibrium 54 Property markets 56 The basics of demand 60 Demand for housing 61 Demand for commercial property 64 Demand for government property 65 The basics of supply 66 The stock of housing 67 Stock of commercial property 70 Stock of government buildings 72 Supply and non ]price determinants 73 Know your markets 75 The unethical market? 77 Food for thought: Behavioural real estate economics 79 PART B FINANCIAL SYSTEMS 83 4 The Macroeconomy and Financial Flows 85 The circular flow model 86 The modern flow of funds model 88 The perils of debt 91 Food for thought: Flow of funds what goes around comes around 93 5 Central Banks and Monetary Policy 99 Ideology: In whose interests? 101 What goes on in the traditional banking sector? 102 The fairytale story of banking 103 The market for derivatives: Weapons of mass destruction 107 Alphabet soup 108 Specialised real estate funding options 111 Central banks 113 Monetary policy before 2008: The conventional approach 113 Monetary policy since 2008: The unconventional approach 118 Food for thought: Cosmetic accounting 124 6 The Financial Recession 127 The language of recessions and recovery 128 A new world 129 Herman Minsky (1919 1996) ahead of his time? 131 Why did no one see it coming? 134 Let the facts speak for themselves 134 Central bank: Lender of last resort 137 Where to look in the future 138 Food for thought: Where is the next crisis coming from? 140 PART C MEASURING AND FORECASTING 143 7 Central Government and Fiscal Policy 145 Macroeconomic targets 146 Central government 152 Fiscal policy 154 Austerity economics 159 Food for thought: An ageing population 161 8 Measuring and Forecasting Economic Activity 165 Some general principles to watch out for 166 Measuring economic growth 168 Measuring income per head 170 Measuring income distribution 172 Measuring inflation 174 Measuring unemployment 179 Measuring international transactions 183 Measuring business fluctuations 186 Forecasting the economy 189 Forecasting property markets 191 Food for thought: The new (High Street) economy 194 Afterword 199 Glossary 202 Webnotes 210 References and Recommendations 215 Index 222
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