“As soon as the land of any country has all become private property, the landlords, like all other men, love to reap where they never sowed, and demand a rent even for its natural produce.” — Adam Smith

All around the world, higher interest rates are making their presence felt in financial markets. We’ve looked at a few of the places they’ve shown up in previous issues of Net Interest – in fatter margins at banks, lower valuations at private companies, the dismantling of speculative excess in crypto. This week, we look at housing, using the UK as a case study. 

The link between interest rates and housing is pretty straightforward. Higher rates push up the cost of mortgage finance, which makes housing less affordable for borrowers. Given that most home purchases utilise some form of mortgage finance, that is going to have an impact. So in this context, it’s no surprise that house prices have already started to fall. Over the past year, the Bank of England has lifted its benchmark lending…