661–670 of 1001 posts
People intuitively jump to the conclusion that the problem is caused by a lack of building. While more building would help, a lack of it isn't the main cause of this problem. Ask yourself, do Canada, Australia, New Zealand, the US, Britain, Ireland, etc, all have the same inability to build or is there maybe some other common cause? In my view this is symptomatic of a more fundamental issue - global asset price infla…
Earlier quoted context omitted.
Anecdotally, all of my friends renting have had their rents continually raised with no breaks. Perhaps there is a wider trend, but if so, their landlords do not seem aware of it.
Part of that is also a fact that renters face the pressure that real estate firms now use big data to manage the rent accross a set of units. They know people will keep paying to avoid the skids so they can keep both rents high, and vacant houses because the over under makes them money. If you had the state / city charge rent to owners on vacant property you'd see rents fall through the floor as realestate companies…
Also known as sufficient property tax.
People intuitively jump to the conclusion that the problem is caused by a lack of building. While more building would help, a lack of it isn't the main cause of this problem. Ask yourself, do Canada, Australia, New Zealand, the US, Britain, Ireland, etc, all have the same inability to build or is there maybe some other common cause? In my view this is symptomatic of a more fundamental issue - global asset price infla…
Put it this way: if over-supply were a problem, what would happen?
Why are 30yr fixed rate mortgages 7% and up so massively from just a few years ago? Shouldn't the interest on the mortgage be about the expectation of average interbank rates for the coming years, plus some margin? Sure interest rates shot up recently, but did banks go from believing we'd have 3% long term average to 7%? My mortgage (not UK) are just fixed in various parts on various semi-short terms (3 months, 1year…
There are no* 30 year fixed rate mortgages in the UK. The typical one is 5 years. I renewed last September for 5 years at 4.49% with about 80% LTV. The problem buying a house for me was always getting the deposit together while paying rent. Most people in the UK seem to rely on gifts from parents. * very few -- there are some very specialised brokers
I'd also be completely unable to afford the deposit for the home I own now (£500k loans at 80% LTV or so). The key was of course buying a small flat, selling that, buying a larger flat with the profit from the first as deposit on the next, selling that. The "income" in terms of property value increase from these month over month for 20 years was almost constantly higher than what I made working each month. If I didn't have the past trades behind me, I'd be renting to my grave. There is zero chance I'd even begin saving for a £100k deposit. It would be 100% of my fun/vacation money for ten years at least.
Earlier quoted context omitted.
> You cannot realistically build enough so that the rents decrease. I'm curious what makes you think this. Suppose you built twice as many housing units as you had residents. Rents wouldn't decrease? Why not? Or do you think that a sufficient amount of housing wouldn't fit? For reference, the San Francisco metro area has ~7.5M people in an area of ~3500 square miles. With housing at the population density of Manhatta…
> Suppose you built twice as many housing units as you had residents. Rents wouldn't decrease? Why not? People make the same specious arguments about gpu production during mining booms etc. Surely producing more gpus will lower the price, or reduce the profit per gpu at least? Are you saying prices don’t fall with increased supply!?!? that’s a counterintuitive statement, Mr Bear! it just also turns out to be a true o…
That is not the argument. In your example, demand is increasing more than supply, so obviously prices would not fall.
Supply has to increase at a rate greater than demand (including higher property taxes to incentivize sellers to increase supply of properties for sale).
Earlier quoted context omitted.
Put it this way: if over-supply were a problem, what would happen?
Depends if property tax was appropriately high to encourage productive use of the land (rather than letting it sit empty).
People intuitively jump to the conclusion that the problem is caused by a lack of building. While more building would help, a lack of it isn't the main cause of this problem. Ask yourself, do Canada, Australia, New Zealand, the US, Britain, Ireland, etc, all have the same inability to build or is there maybe some other common cause? In my view this is symptomatic of a more fundamental issue - global asset price infla…
It’s a multitude of factors - limited supply in certain (most?) markets, “cheap money”, supply chain factors with certain common building materials, “corporate owned homes”. One thing that has definitely not helped is hostile building codes that prevent density. In some cities in the US, building height is constrained by the nearest single family home. Then there’s the parking minimums for buildings that allocate mor…
That doesn’t explain why it’s so hard and expensive to build things. We built those suburbs in the first place when we were much less rich as an economy. Indeed, we built all the water and sewage and electrical infrastructure all over the place too.
Earlier quoted context omitted.
The worlds population has doubled since 1974. In every country listed the rate of new building construction has stayed roughly constant or declined since then. You can explain this phenomenon with an Econ 101 supply and demand curve without need for any further elaboration.
That's contradicted by the provided OECD link that shows that in many countries the housing stock per capita has stayed the same or slightly increased since 2011. Yet prices continue to increase.
https://genus.springeropen.com/counter/pdf/10.1186/s41118-02...
People intuitively jump to the conclusion that the problem is caused by a lack of building. While more building would help, a lack of it isn't the main cause of this problem. Ask yourself, do Canada, Australia, New Zealand, the US, Britain, Ireland, etc, all have the same inability to build or is there maybe some other common cause? In my view this is symptomatic of a more fundamental issue - global asset price infla…
In the UK, we have an issue with immigration that nobody wants to speak about. The birth rate in the UK is 1.49 in 2022 [1], meaning that housing demand should be going down. We build houses to last, and yet there is a massive shortage - why? In 2023 the ONS reported we had a net migration of 685k people [2], where 9% of the population do not have a British nationality at all.
The demand for housing in the UK (and related infrastructure) can be entirely explained by net migration. The reason the housing market is bubbling is because the demand is so insanely high. We need to build 340k houses a year to keep up with demand [3].
The fundamental issue in the UK is that we borrowed too much from the future, in terms of loans, but also pensions. They think that increasing the population dramatically will solve the problem, but it's actually destroying the UK. We are building on farmland, the infrastructure (water, gas, electric, roads, schools, etc, etc) is failing under the weight of the new housing. The interest on the debt owed [5] I believe is projected to exceed spending on the NHS (national healthcare system) by 2035.
The question we need to ask is whether large net migration is worth it, or whether we should largely reduce it. It seems clear to me that the UK is currently trying to grow too fast. It'll be a bitter pill to swallow, but at some point you need to deal with the spiralling situation.
> This is a problem of underutilisation in my view. Too many properties are being used as investments and not as a primary residence.
In NZ and many other Countries they put bans on foreign buyers exactly to stop this investment [4]. I know many, many professionals living in NZ that cannot afford to buy a home. They are all stuck renting, despite all earning in the top 25%.
[1] https://www.theguardian.com/uk-news/2024/feb/23/birthrate-in...
[2] https://commonslibrary.parliament.uk/research-briefings/sn06...
[3] https://commonslibrary.parliament.uk/research-briefings/cbp-...
[4] https://www.pittandmoore.co.nz/publications/foreign-buyer-ba...
People intuitively jump to the conclusion that the problem is caused by a lack of building. While more building would help, a lack of it isn't the main cause of this problem. Ask yourself, do Canada, Australia, New Zealand, the US, Britain, Ireland, etc, all have the same inability to build or is there maybe some other common cause? In my view this is symptomatic of a more fundamental issue - global asset price infla…
Here in Canada, the desirable places to live all have relatively low vacancy rates for residential housing, and have for quite some time. Ie, it's rare to see cities with vacancy rates for apartments exceeding 3%, let alone a healthy 5%.[0] The CMHC estimates that by 2030 we will need 3.5M additional homes beyond the expected number to be produced.[1] The PBO has come up with similar numbers; roughly speaking, Canada needs to complete a new home every 50 seconds just to maintain current price levels.
There's much gnashing of teeth up here over our housing crisis, and it's clear to me that it's a multi-factor concern[2]. While there simply exists much more demand than the supply can service, the reasons for low supply are many and complicated. There are the obvious zoning and infrastructure issues; we don't build for mid and high density nearly enough, and we rely too heavily on cars. There's the labour supply issue the politicians focus on. But most unnerving, to me, is the suggestion that we simply do not have the capacity to produce or source the raw materials necessary in construction.
0: https://www150.statcan.gc.ca/t1/tbl1/en/tv.action?pid=341001...
1: https://www.cmhc-schl.gc.ca/blog/2023/estimating-how-much-ho...
2: https://thoughtleadership.rbc.com/the-great-rebuild-seven-wa...