Building unsubsidised housing pushes down rents and prices while freeing up cheaper properties
The study found that when Americans were asked to predict the impact of a supply shock on prices for labour, commodities or consumer goods, the correct answers outnumbered the wrong ones by at least two to one. When asked about the impact of a 10 per cent increase in regional housing supply, however, 40 per cent say prices and rents would rise, while only a third say they would fall.
Incredible!
That is insane that 40% of Americans don’t understand basic supply and demand.
Seems kinda low honestly. About half the country votes for supply side economics and still thinks Reagan was a good president… so…
The amount of houses has only increased since world war 2.
At the same time, the cost of housing has also mostly increased, except for recessions. On average, housing costs have increased faster than inflation and wages.
It seems the data contradicts the mantra.
Overlay that with population growth and it really doesn’t.
Not true, houses have also grown faster than population. In another comment I gave the figures for France and the UK.
This stuff is easily Googled.
So show me where population has outstripped housing.
In British and American cities, population growth has vastly outstripped residential property construction for decades. This is basic demand and supply - if demand grows by more than supply grows, the price goes up.
So tell me how building “any” new homes reduces prices, because that’s what the title says (article is paywalled)
Also, between 2011 and 2021 the population in England and Wales grew by 6% while the housing stock grew by 8%.
Guess what the housing prices did?
Do we just spout high school level economic conjectures as truth without consulting actual easily Googled figures nowadays?
Increasing supply reduces the price - always.
Increasing demand increases the price - also always.
If we’d not built any homes in recent decades, prices would be dramatically higher than they are currently. This is primary school economics.
Do you want to explain through what mechanism you think supplying more houses leads to houses becoming more expensive?
Economics is not a subject in primary school…
Real economies are more complex than simple supply and demand curves.
The number of houses is outpacing population growth across the developed world, so by your simple logic house prices should be going down. France has a whopping 55 houses per 100 people today, compared to 45 in 1980. For Britain it went from 40 to 44.
But the main reason for house prices going up is increased demand for houses… as investments.
Growing wealth has meant people look for places to store their money and stones are a favoured investment.
Somehow a lot of westerners recognize this when they see the Chinese ghost cities, but the exact same thing happens in developed countries, except the houses are rented out as AirBnBs or rented to students, etc.
But the main reason for house prices going up is increased demand for houses… as investments.
You’re describing a demand effect - people demand property as an asset class so the price goes up.
For any level of demand, increasing the supply will decrease the price.
Ok, so you just want to build Chinese ghost cities, gotcha.
I want to increase the supply of X, so the price of X becomes lower.
X happens to be houses in this case, but it could be food, clean water, medicines, etc - I want to make the basic necessities of life more affordable.
Prices are determined by what happens at the margin. Saying that housing supply has increased is meaningless unless you also look at housing demand, especially if we’re talking about the regions where prices have gone up most (i.e., cities that lots of people want to move into).
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