Intuitively, one might expect the high population density and apparent structural undersupply of housing in the UK to mean that we have historically spent a higher proportion of our earnings on mortgages than other major economies. In fact our analysis shows that, over the past 40 years, long-run average UK mortgage affordability is unremarkable in an international context. To our minds, this casts doubt on the popular view that a chronic undersupply of homes in the UK supports high house prices.
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