The UK's Forgotten Economic Crisis

Summary

This video explores the British financial crisis of the 1960s, triggered by housing market mismanagement. It discusses the government's attempts to control the economy through strict mortgage rationing, leading to a decline in housing quality and affordability. The script contrasts the era's policies with the 2008 housing crisis and examines the effects of alternating government strategies, from Labour's cautious approach under Harold Wilson to Conservative Prime Minister Edward Heath's relaxation of financial restrictions. The video concludes by questioning whether the crisis could have been avoided with better understanding of supply and demand.

Takeaways

• 🏛️ The British economy faced a housing crisis in the 1960s, leading to unaffordable houses and a decline in living standards.
• 🏗️ Post-war reconstruction saw Victorian houses replaced by tower blocks, aiming for utopian living but resulting in community separation.
• 📉 Economic growth was inconsistent, with Britain's annual trade deficit being a significant concern, affecting the value of the pound.
• 🏦 The government attempted to control the economy with strict mortgage rationing, leading to a housing market crisis.
• 🔄 Harod Wilson's labor government tried to stabilize the housing market by reducing wages and prices without raising interest rates.
• 🚫 Mortgage rationing led to a decrease in housing quality and a false sense of supply and demand, causing economic stagnation.
• 📉 The housing market suffered from shrinkflation, with 77% of new builds being below 1,000 sq ft and a lack of reception rooms.
• 💸 Edward Heath's government relaxed financial restrictions, leading to a surge in housing prices and a short-lived boom.
• 📈 Inflation and economic instability in the 1970s were exacerbated by government policies aimed at stimulating the housing market.
• 🏡 The crisis led to a housing shortage and a divide between those who could afford private property and those stuck with low-quality public housing.
• 🔄 The 1980s brought some stabilization as the government's interventions and market dynamics began to even out after years of fluctuation.

Q & A

What was the economic situation in Britain during the 1960s?

The 1960s in Britain was marked by a struggling economy, with unemployment rising, salaries stagnating, and housing becoming increasingly unaffordable. The country was dealing with a housing crisis that had been exacerbated by the government's attempts to control the economy through strict mortgage rationing.

What were the architectural changes in Britain's housing during the 1960s?

The architectural landscape of Britain changed significantly in the 1960s with the replacement of Victorian architecture and quaint villages with brutalist tower blocks and commercial centers. This was part of an effort to create a utopian vision where more people could live closer together.

How did the housing policies of the 1960s impact the British economy?

The housing policies of the 1960s, which included strict mortgage rationing and attempts to control the housing market, led to a rapid growth in the housing sector that almost tanked the country's finances. The policies resulted in a false sense of supply and demand, leading to the construction of subpar housing and a decline in living standards.

What was the role of Harod Wilson's labor government in the housing crisis?

Harod Wilson's labor government, which came to power in 1964, attempted to stabilize the housing market by reducing wages and prices without increasing interest rates. They introduced measures to control who could get a mortgage and how much they could borrow, which ultimately led to a financial crisis due to restricted supply and demand.

What were the consequences of the housing policies on the quality of homes built during the 1960s?

The housing policies led to the construction of smaller and lower-quality homes as developers tried to economize on limited capital. This resulted in a decline in housing quality, which persisted for decades, contributing to social inequalities and a widening gap between the haves and have-nots.

How did the economic policies of the 1970s affect the housing market?

The economic policies of the 1970s, particularly the relaxation of financial restrictions by Edward Heath's conservative government, led to an influx of credit and a surge in housing prices. This resulted in a housing market boom followed by a crash, exacerbating the housing shortage and leading to a period of economic instability.

What was the 'stagflation' phenomenon mentioned in the script, and how did it impact Britain's economy?

Stagflation refers to a period of slow economic growth accompanied by high inflation, which occurred in the mid-1970s. In Britain, this phenomenon led to a decrease in the real value of mortgage debt, making it easier for borrowers to repay their loans, and it helped stabilize the housing market by wiping out debts of building societies.

What was the role of the 1974 snap election in Britain's economic policies?

The 1974 snap election, called by Conservative Prime Minister Edward Heath in response to a coal miner strike, resulted in his loss and the return of Harod Wilson's labor government. This change in government led to a shift in economic policies, including a deal with building societies to cap mortgage rates and a bailout, which helped stabilize the housing market.

How did the housing crisis of the 1960s and 1970s influence the construction industry?

The housing crisis led to a period of shrinkflation, where developers built smaller and lower-quality homes, and later, many house builders went under due to the retightening of lending practices and a lack of demand for their products. This resulted in a hit to the construction sector, with fewer homes being built and an exacerbated housing shortage.

What lessons can be learned from Britain's housing crisis of the 1960s and 1970s for future economic planning?

The crisis highlights the importance of understanding supply and demand dynamics, the potential pitfalls of government intervention in the housing market, and the need for a balanced approach to economic policy. It also underscores the long-term consequences of rapid expansion without regard for quality and the need for robust economic systems to handle population growth and housing demand.

Outlines

00:00

🏛️ The Housing Crisis of the 1960s

This paragraph discusses the economic challenges faced by Britain in the 1960s, including unemployment, stagnant wages, and housing unaffordability. It highlights the government's efforts to address the housing crisis through the construction of tower blocks and suburban sprawl, which ultimately led to a financial slump. The era's economic struggles are contrasted with the architectural and societal changes of the time, such as the replacement of Victorian architecture with modernist designs. The paragraph also touches on the government's strict mortgage rationing and its attempt to control the economy, which contributed to the financial difficulties.

05:03

📉 The Impact of Mortgage Rationing

Paragraph 2 delves into the consequences of the labor government's policies under Harold Wilson in 1965, which aimed to control the housing market by capping lending and restricting mortgage availability. The policies led to a decrease in housing quality as developers sought to minimize costs, resulting in smaller and lower-quality homes. The paragraph explains how these measures created a false sense of supply and demand, with a persistent feedback loop that disincentivized the production of better housing. It also discusses how the government's policies inadvertently contributed to economic stagnation and social inequality, as well as the eventual introduction of capital gains tax and its impact on home ownership.

10:05

💹 The 1970s Financial Shift

Paragraph 3 describes the shift in financial policy under Edward Heath's conservative government in 1970, which relaxed financial restrictions and used the central bank's interest rates to control the money supply. This approach led to an influx of credit, causing the fastest price increases in British housing history. The paragraph outlines the government's attempts to stimulate growth in the housing sector, which instead led to a seller's market and increased financial strain on first-time buyers. It also discusses the broader economic context, including the 1973 oil crisis and the devaluation of the pound, and how these factors, combined with the government's housing policies, contributed to a period of stagflation and economic instability.

15:05

🏗️ The Resolution and Aftermath

The final paragraph discusses the resolution of the housing and financial crisis in Britain during the 1970s. It details how the government's policies, including fiscal stimulus packages and tax cuts, initially led to a surge in housing demand but ultimately resulted in an overheated economy and a subsequent crash. The paragraph also covers the role of inflation in stabilizing the housing market and the government's efforts to support building societies and homeowners. It concludes by reflecting on the long-term effects of the government's interventions on the housing market and the economy, suggesting that a better understanding of supply and demand could have led to different outcomes.

Keywords

💡Unemployment

Unemployment refers to the state of being without a job while actively seeking work. In the video's context, rising unemployment is one of the indicators of a struggling British economy. The script mentions unemployment as part of a broader set of economic woes, illustrating the hardship faced by the population during the economic slump.

💡Stagnating Salaries

Stagnating salaries describe a situation where wages do not increase over time, effectively eroding purchasing power due to inflation. The video uses this term to highlight the financial strain on workers, suggesting that despite working, individuals are not seeing growth in their income, which is a contributing factor to the economic difficulties discussed.

💡Unaffordable Housing

Unaffordable housing indicates a scenario where the cost of housing is beyond the financial reach of the average income earner. The script uses this term to underscore the housing crisis in Britain, where people are unable to afford homes, leading to social and economic challenges. It ties into the broader narrative of economic downturn and its impact on living standards.

💡Brutalist Architecture

Brutalist architecture is a style characterized by blocky, massive forms, often using concrete. In the video, this term is used to describe the type of buildings that replaced traditional British housing during the 1960s, reflecting a shift in urban planning and societal structure. The script critiques this architectural style as part of the broader economic and social issues of the time.

💡Mortgage Rationing

Mortgage rationing refers to the government's control over the availability of mortgages to manage the economy. The video explains how this policy was used to control the housing market during the 1960s in Britain, aiming to stabilize the economy but inadvertently leading to a housing crisis. It's a key concept in understanding the government's role in exacerbating economic challenges.

💡Trade Deficit

A trade deficit occurs when a country imports more goods and services than it exports. The video mentions Britain's annual trade deficit as a significant economic issue, contributing to the overall economic downturn. It illustrates the broader economic challenges Britain faced during the period discussed.

💡Housing Market

The housing market encompasses all real estate transactions, including sales and rentals of residential properties. The script discusses the rapid growth and subsequent issues within the housing market, such as the construction of subpar homes and the impact of government policies on housing affordability and availability.

💡Economic Stagnation

Economic stagnation is a period of little or no economic growth. The video uses this term to describe the British economy during the 1960s and 1970s, highlighting the various factors that contributed to this state, including issues with unemployment, housing, and wage growth.

💡Inflation

Inflation is the rate at which the general level of prices for goods and services is rising, and subsequently, the purchasing power of currency is falling. The video discusses how inflation affected the British economy, particularly in relation to housing costs and wage growth, contributing to the economic instability of the period.

💡stagflation

Stagflation is a situation in which the economy is stagnant, but prices continue to rise. The video mentions stagflation as a key economic issue during the 1970s in Britain, where despite little economic growth, prices were increasing, leading to a challenging economic environment.

💡Fiscal Stimulus

Fiscal stimulus refers to government spending and tax cuts aimed at boosting economic activity. The video discusses the implementation of a large fiscal stimulus package by the British government in the 1970s to address economic challenges. It highlights the government's attempt to stimulate the economy but also the unintended consequences of such policies.

Highlights

The British economy is facing challenges such as rising unemployment, stagnating salaries, and unaffordable housing.

The current economic slump has roots in a financial crisis from almost 60 years ago.

The 1960s saw a shift from Victorian architecture to brutalist tower blocks, impacting housing affordability.

The rapid growth of the housing market during the 1960s nearly collapsed the country's finances.

Government attempts to control the economy through strict mortgage rationing led to a housing supply-demand imbalance.

Harold Wilson's labor government in 1964 introduced policies to stabilize the housing market without increasing interest rates.

Reducing wages and prices to stabilize the housing market led to a financial crisis.

Mortgage rationing in 1965 resulted in smaller, lower quality homes and a false sense of supply and demand.

The government's policies created a housing market with a surplus of poor quality homes and a lack of good housing options.

The Parker Morris report of 1961 recommended better housing standards, but these were not made mandatory until 1967.

Housing prices remained stable, but the quality of housing declined significantly.

Edward Heath's government in 1970 relaxed financial restrictions, leading to a surge in housing prices.

The 1970s saw high inflation and a devaluation of the pound, impacting the housing market.

The 1972 budget introduced the largest peacetime fiscal stimulus package in British history, leading to a temporary boom in housing demand.

The mortgage market crashed in 1973, leading to a mortgage famine and a freeze in housing transactions.

Rapid inflation in the mid-1970s helped stabilize the housing market by reducing the real value of mortgage debt.

The 1980s brought some stability to the housing market after almost 15 years of government influence through credit markets.

The crisis highlighted the importance of understanding supply and demand in the housing market to avoid financial instability.

Transcripts

the British economy is in a bit of a mess at the  moment to put it mildly unemployment is rising  

salaries are stagnating houses are unaffordable  cities are going bankrupt and our public utilities  

are in dire disrepair and people are covering this  shortfill with debt but what if I told you that we  

have actually been here before and that this slump  was set in motion almost 60 years ago with these  

boring British tow houses these quintessentially  British living quarters are the remnants of a  

forgotten financial crisis that actually saw house  prizes become even more unaffordable than they  

are today depending on who you ask the 1960s was  either an era of free love and radical thought or  

an overrated blip of color in a drab decade either  way when it came to the economy Britain was going  

through a dark period and it was all because of  the housing situation Victorian architect Ure  

and quaint Villages were torn up to be replaced  by brutalist tower blocks and Commercial centers  

instead of white picket fences Suburbia spred  with glaring brick work and Factory backdrops  

Architects believed they were Paving the way  for a utopian Vision where more people could  

live closer together with more neighbors for a  stronger community in reality the rapid growth  

of the housing market almost tanked the country's  finances completely and those tower blocks didn't  

house any more people than the streets anyway  they needed more space to separate the community  

housing as per health and safety considerations  and instead of improving the living conditions  

of the growing population the rows of subpar  new bills made things worse for everyone but  

the spoiling of the British landscape wasn't just  down to wannabe revolutionaries it was a result  

of the government trying to control the economy  with strict mortgage rationing the postwar boom  

was over and the rise in population was getting  expensive in 196 4 harod Wilson's labor party  

ended the conservative party's 13-year rule under  Tory rain economic growth had been inconsistent  

especially when compared to Her Majesty's European  neighbors Britain's annual trade deficit was  

around 800 million which was about 1.8% of the  GDP Returns on foreign assets helped decrease  

the deficits though a lot of that had already been  sold off to fund both world wars but it also came  

from borrowing from foreign lenders and the sales  and returns of domestic UK assets however this  

weakened the pound and created a double-edged  sword on the one hand British assets became  

cheaper to invest in foreign investment paid for  the gap between imports and exports the downside  

was Foreign imports became too expensive in the  end people bought less of them nowadays balancing  

a deficit this low wouldn't be much of a problem  unfortunately Britain didn't have an adequate  

system in place back then in essence the dam had  sprung a leak but fixing it wasn't as simple as  

it seemed Britain needed a way for domestic  assets to become cheaper to balance outflows  

of foreign currency however Britain also needed  a way to ensure that Imports didn't become more  

expensive because then they'd lose foreign money  they had to act fast but not hastily so Wilson's  

government did the usual things like cutting  spending raising taxes and Hiking interest  

rates to protect the pound but these were just  temporary Solutions like slapping on some cheap  

wool filler to the giant cracks in your Dam that's  why Wilson also did something risky he reduced  

wages and prices without an increase in interest  rates basically he banned prices from getting  

any higher his logic was that limiting access to  credit would stabilize the housing market while  

broadening the economy as housing was set to  become a real strain on the economy due to the  

baby boom it made sense to focus on this sector  unrestricted lending could lead to Bubbles and  

financial catastrophe so Wilson thought if he  could control who gets a mortgage and how much  

they could borrow the risks from excessive  borrowing and speculative investing would be  

mitigated in many ways this was the opposite  of the 2008 housing market that was caused by  

complacent Bankers giving mortgages to people who  they knew wouldn't have been able to pay it back  

on this occasion Wilson was overcautious about  finding the most dependable citizens to butress  

the costs of the growing sector but this created  its own financial crisis what was the point in  

limiting mortgages for people who didn't even  want the houses in the first place restricting  

Supply without demand had devastating consequences  on British living standards for decades to come  

however Wilson's gamble seemed logical the economy  was Fragile the pound was weakening an unregulated  

for-profit property Market could benefit the f  over the many so how exactly did these prudent  

policies lead to a worse financial crisis and will  Britain repeat the same mistakes now that the cost  

of living is the highest it's ever been it's  time to learn how history works as we remember  

Britain's forgotten financial [Music] crisis in  1965 one year after Wilson's labor government came  

to power Banks were ordered to Cap all lending at  105% of the nominal monthly rate the time to put  

Wilson's plan into action had officially begun  yet his Gambit had two immediate unfortunate  

consequences the first was that the economy  was so shaky that homeowners simply couldn't  

access enough financing to purchase their homes  because there wasn't enough Capital to go around  

the second was that developers had less Capital  to build with so what happened developers made  

smaller and smaller homes of worse and worse  quality in the hopes of snapping up the most  

desperate homeowners this created a false sense  of supply and demand demand sure there was demand  

for housing there would always be a demand for  housing when a population grows but the demand  

was for good housing unfortunately the supply of  good housing sucked and as developers lowered the  

quality of housing to get the most out of their  limited resources demand stagnated this feedback  

loop meant developers were disincentivized  to create better housing and the government  

believed things were going well because there  was always a queue of people needing homes so  

they were disincentivized to release more Capital  the the fact that normal citizens were put in die  

straight didn't seem to bother either group yet  this feedback loop persisted the economy didn't  

get much better and housing quality got worse and  worse strangely standards had been recommended  

years earlier in the Parker Morris report of  1961 proposals emphasized the need to distribute  

heating better so parlors were abandoned in  favor of two living spaces one would be quiet or  

communial like where your TV would go and another  would be for eating with an enlarged kitchen for  

modern appli es unfortunately it wouldn't be until  1967 that these recommendations became mandatory  

in public housing by that time developers had  created a bountiful stock of bad homes the only  

good thing about this period was that at least  housing prices stayed relatively stable volatility  

from price increases were decades down the line  but even if you could afford a home the mortgage  

rationing became another obstacle between you and  Home Ownership frustration from being locked out  

of the market contributed to economic stagnation  because getting onto the property ladder was  

burdensome so families opted to rent or move  in together there were all these new houses at  

stable prices but no one was buying them plus the  only way for developers to economize on mortgage  

scarcity was to make homes easier to afford which  meant making them shoddier in essence the housing  

market suffered from shrink flation between 1966  and 1977 77% of new builds were below 1,000 s ft  

almost almost half of the previous stock had two  reception rooms whereas only 1/3 of new builds had  

them buyers had a choice buy a bad house at the  market price or get a discount on an even worse  

home if you think your renting situation is dire  spare a thought for young families trying to get  

a start in life during the mid 60s it makes Harry  Potter's cupboard Under the Stairs seem like a  

trendy studio apartment as you can expect the  Divide between the Haves and Have Nots widened  

social inequalities middleclass families could  turn to the private property Market with higher  

living conditions and more space these builds  came with all the luxurious trimmings of the 1960s  

integrated garages spacious Whit halls and garden  patios to capitalize on the British summertime all  

two weeks of it compare that to the Victorian  housing that was torn up in the first place  

and it was clear how neighbors were on a more even  playing field but by 1965 Wilson's government was  

already sensing that their plan wasn't working  they introduced some tax revamps to reduce the  

pain of home ownership to start they introduced  britan's first ever capital gains tax however  

owner occupied houses were exempt which made them  more tax advantaged than other Assets in layman's  

terms this reduced the costs of buying a home so  that they became a more tantalizing investment  

compared to other assets the plan was to attract  those with spare cash to use their Investments to  

prop up the housing sector but this didn't help it  was the equivalent of trying to block a leaky Dam  

by sticking your fingers in the holes only for  the pressure to create even more cracks that's  

because these tax breaks ended up raising prices  without raising Supply or quality oops it was like  

Wilson's government had inherited a bad economy  held together with tape and string but their way  

to fix it was to prop it up with a rude Goldberg  machine as the 1970s approached many believed the  

latest homes were inferior quality to older social  housing compare these two images and guess which  

home was built in the 1930s and which was built  between 30 and 40 years later and while all this  

was happening wages had been increasing despite  Wilson's wage freeze yet even with government  

subsidies people weren't buying bigger and  higher quality homes like other Western European  

countries instead Brits were queuing up for  die living quarters like their Eastern European  

communist counterparts but that all flipped  in 1970 suddenly credit was Unleashed on the  

masses Edward Heath's conservative party won the  next election and immediately relaxed Financial  

restrictions this time the government enacted a  policy to use the central bank's interest rate to  

control the overall money supply their theory was  that they would simply raise interest rates across  

the board Whenever there was too much money in the  system that way they wouldn't have to laboriously  

calculate at and enforce lending limits for each  Bank essentially the Tories reversed the labor  

policies which had exacerbated the problems in the  housing market think of it like instead of trying  

to reinforce the Leaky Dam all at once they'd wait  for leaks to appear and deal with them one by one  

like an economist's version of whack-a-mole and  the result cash flooded the housing market and  

everybody lived happily ever after just kidding  the inelastic supply of housing just meant that  

price Rises became the fastest ever in British  history oops what should have been a way to  

stimulate growth in the housing and construction  sectors did little to sty the problems as there  

still wasn't enough Supply to meet demand  firsttime buyers were hit hardest by the sudden  

access to mortgages because now it was a sell's  market in the same way that Wilson's government  

had been over cautious with an unregulated Market  Heath's government had overlooked how relaxing  

credit controls too much would destabilize  pricing of course there were other reasons why  

why inflation was high in the '70s there was the  1973 oil crisis passing Rising manufacturing costs  

onto customers and the continued devaluation  of the pound but the UK government's hope to  

motivate spending and investment in housing played  a key role in reshaping market dynamics things got  

worse in 1972 when unemployment rates Rose to a  post-war record over 1 million people went without  

work mostly due to declines in British industry  even though the previous year years had seen a  

rise in real earnings the increase in employment  coupled with the overpriced housing market was  

straining the economy to Breaking points prices  were high cash was low something desperate had to  

be done so in his 1972 budget the chancellor  of the ex- Checker Anthony Barber announced  

the largest peacetime fiscal stimulus package in  British history the taxes that Wilson had raised  

were cuts and the spending that was decreased  was increased and the results growth suddenly  

anyone who met the mortgage criteria could get a  home loan and even take advantage of generous tax  

cuts housing demand exploded increased mortgage  Landing peaked at 123% by the end of 1972 by 1973  

40% of all mortgages had been approved within  the previous 2 years in just under 10 years the  

whole situation had flipped well almost little  had been done to fix the supply side of things  

nowhere could accommodate the sudden release of  housing demand at least not legally this meant  

buyers competed desperately for the homes that had  already existed the same homes they were denied  

access to before but having a mortgage to buy  them only worsen things for the average citizen  

between 1971 and 1973 prices for these lowquality  builds were up 70% Barber's budget had overheated  

the general economy in other words the rubbe  gold bug machine propping up the arious economy  

had too many parts in response the government  removed the stimulus Parts which caused the  

whole Contraption to collapse the so-called Barber  boom was short-lived along with any semblance of  

economic Improvement the mortgage Market crashed  leading to a mortgage famine but maybe it's better  

to think of it as a mortgage drought while a  leaky dam is threatening to flood the whole  

village by mid 1973 inflation was up to 9% and  the pound was under even more pressure thanks to  

the collapse of the Breton Woods fixed exchange  rate system that was basically the equivalent of  

reaching payday only to realize that a phone app  had a sneaky subscription fee now the government  

had no choice but to hike Central Bank interest  rates further boosting it by Just Four Points  

was their last ditch attempt to prevent a currency  crisis their policy dubbed competition and Credit  

Control was scrapped controls over Bank lending  were reintroduced yet even these efforts weren't  

enough Savers and investors withdrew funds from  building societies seeking better returns in the  

market between 1973 in 1974 lending from building  societies collapsed credit was scarce housing  

transactions froze prices fell but wages weren't  exactly increasing no matter how many fingers the  

government used to plug the dam more holes were  appearing could anything be done the building  

societies desperately needed cash and the most  obvious thing would be to increase interest rates  

if the building societies want to attract more  Capital they would have to raise interest rates  

to compete with Market interest rates but doing so  would have harmed existing mortgage rates remember  

40% of mortgages were only a few years old if  these citizens defaulted on their payments the  

whole Dam would burst and at these prices it could  trigger a collapse of building societies Banks and  

any other lender Tangled Up in the ru Goldberg  machine of the British housing market it felt  

like anyone could make the situation better but  no one had a real solution Britain was screwed the  

country had had a decade of opposing governments  trying opposing things to balance the situation  

they taken turns introducing and repealing  policies only for short-term gains to result  

in deeper long-term problems well in a Twist  of ironic fate the key to solving the problem  

was simple all they had to do was do nothing in  the end stagflation came to save the day here's  

how it happened happened during the mid 1970s  voters with mortgages could swing the election  

when conservative prime minister Edward Heath  called a snap election in 1974 in response to  

the famed coal miner strike he promptly lost the  vote because homeowners had shifted left Wilson  

was back in power but time would tell whether  homeowners were just punishing the Tories or  

actually wanted the government to prop up the  flailing building societies by now building  

societies had to Bear the brunt of the financial  instability thank y for them rapid inflation wiped  

out all their debt although this came at the cost  of homeowners and Savers in any case Wilson wanted  

to be sure that he knew what voters actually  wanted so he planned another election that  

Autumn according to Legend he once remarked  to a treasury Minister either we prevented  

the mortgage rate going up and we would win the  election or we allowed it to go up and we would  

lose the election but the conservative party  had also pledged to cap mortgage rates so will  

offered the building societies a deal cap their  rate at 11% instead of the Tor proposed 7% and  

he'll bail them out it was an offer the building  societies couldn't refuse this move for stalled  

a massive equity and default crisis by people who  had recently sold homes or taken out massive loans  

in essence it prevented a fight or flight response  from the people plugging up the Leaky Dam but  

Wilson didn't do it alone soaring inflation was  also helping to stabilize things borrowers had an  

easier time repaying their loans because the real  value of Mortgage Debt had decreased even though  

prices had fallen 40% so building societies  got propped up and homeowners effectively got  

subsidies it seems like the crisis was finally  over except for the building developers they were  

left holding the bag they'd been forced to buy  land at inflated prices use little money to build  

houses that no one wanted which they couldn't sell  because of the retightening of lending practices  

between 1974 and 1977 many house builders went  under the KnockOn effect was the construction  

sector taking a hits even fewer homes and an  exacerbated housing shortage but the night is  

darkest Just Before Dawn with the 1980s on  the horizon things were finally evening out  

the clogged holes and paved cracks in the  Dam's wall were holding the meddling that  

started in 1964 had created almost 15 years of  instability all because governments took turns  

influencing the housing market through the credit  Market if only the likes of Wilson and Heath had  

understood the concept of supply and demand  better so maybe things would have panned out  

differently if lending was looser at the start  of the 60s and Tighter at the end of the decade  

and maybe if unemployment and the population  hadn't been so high then the economy would  

have been more robust or maybe just maybe the  housing market wouldn't have led to a financial  

crisis if the homes on offer were decent to begin  with but what do you think did the baby boom put  

the government in a catch 22 sit situation or  does rapid expansion always come at the cost  

of quality let us know your thoughts in the  comments below if you liked this video check  

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