Source: BBC News · Link
Reading this article made me realise how some problems in economics can’t be solved purely through the market mechanism. The UK housing market right now is a clear example — rents are soaring, supply is shrinking, and people are struggling to find affordable homes. Even if we let prices adjust freely, there seems to be no short-term equilibrium because the supply response in housing is so slow. This makes me think that government intervention becomes inevitable, but it must be holistic. Simply introducing rent controls without coordinating with monetary policy or addressing the cost of borrowing could worsen the situation. What fascinates me most is how this issue shows the interconnectedness of economics: a micro problem in one sector can ripple through the entire economy. It’s like a real-world butterfly effect — where a housing shortage could eventually feed into inflation, interest rates, and even overall economic growth.