It’s a multifaceted problem, but somehow our governments have made the wrong call in all of the facets.
We’ve stopped funding public housing. After WW2 we had an excellent system of building lots of public housing. My mum grew up in one of these houses, and her mum lived in it until she died. Unfortunately we’ve allowed people to buy their government housing (which I think is actually a good thing!) but haven’t used that funding to buy new properties to replace it. So the quantity has slowly decreased, when it should have been increasing as the population increased.
We’ve had strict zoning laws influenced by NIMBYs making it so that the amount of homes that can be built per unit area are much lower than would be ideal. This essentially decreases the supply, which any high school economics textbook would tell you is gonna increase the price. If course, not only does it drive up the price, but it forces poorer people further out into the suburbs, making them pay way more in their daily transportation costs to get into the city for work, or to travel around to other suburbs for leisure and recreational activities. And it makes public transport less efficient, and requires more road infrastructure, so you’re also paying more in tax per capita to pay for all of that.
And then on top of all that, we’ve had policies encouraging the use of the housing market as…well…a market. Encouraging people to invest in housing to supplement their income or pay for their retirement. So now we’ve reached a situation where politicians don’t dare actually solve the problem. Nobody in the media will ask them this, but if you did ask a politician directly “do you want house prices to fall”, they would probably waver rather than directly answer. They can’t say “yes”, because all those investors and (more to the point) aspirational investors would be up in arms about it. But they can’t directly say “no” either, because that’s unpalatable to all those priced out of the market. Of course, if you look at their actual actions, it becomes clear. They still support investors via tax incentives and weak regulation protecting tenants.
What we need is more political pressure around actually lowering housing prices. People in the media questioning politicians should put the question in no uncertain terms and push to get a direct answer. And if they do agree that they should fall, ask them “by how much?” 5% over 5 years? 10%?
It’s a multifaceted problem, but somehow our governments have made the wrong call in all of the facets.
We’ve stopped funding public housing. After WW2 we had an excellent system of building lots of public housing. My mum grew up in one of these houses, and her mum lived in it until she died. Unfortunately we’ve allowed people to buy their government housing (which I think is actually a good thing!) but haven’t used that funding to buy new properties to replace it. So the quantity has slowly decreased, when it should have been increasing as the population increased.
We’ve had strict zoning laws influenced by NIMBYs making it so that the amount of homes that can be built per unit area are much lower than would be ideal. This essentially decreases the supply, which any high school economics textbook would tell you is gonna increase the price. If course, not only does it drive up the price, but it forces poorer people further out into the suburbs, making them pay way more in their daily transportation costs to get into the city for work, or to travel around to other suburbs for leisure and recreational activities. And it makes public transport less efficient, and requires more road infrastructure, so you’re also paying more in tax per capita to pay for all of that.
And then on top of all that, we’ve had policies encouraging the use of the housing market as…well…a market. Encouraging people to invest in housing to supplement their income or pay for their retirement. So now we’ve reached a situation where politicians don’t dare actually solve the problem. Nobody in the media will ask them this, but if you did ask a politician directly “do you want house prices to fall”, they would probably waver rather than directly answer. They can’t say “yes”, because all those investors and (more to the point) aspirational investors would be up in arms about it. But they can’t directly say “no” either, because that’s unpalatable to all those priced out of the market. Of course, if you look at their actual actions, it becomes clear. They still support investors via tax incentives and weak regulation protecting tenants.
What we need is more political pressure around actually lowering housing prices. People in the media questioning politicians should put the question in no uncertain terms and push to get a direct answer. And if they do agree that they should fall, ask them “by how much?” 5% over 5 years? 10%?