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Sunday 30 April 2017

BUILDING MORE HOUSES won’t bring down prices anytime soon.

Supply and demand. You can’t buck the market. So increasing supply is always a good way to hold down prices in the market, isn’t it?

So why won’t the call to “build more houses”, even if heeded, result in more affordable homes? Because the housing market is not normal. It needs fixing, but Government has no real intention of bringing down house-prices. So saying ‘building more homes will fix it’ is a just a way of distracting attention away from the real solution.

That seems to be the idea behind the latest Government Paper on Fixing Our Broken Housing Market[1]. You won’t be surprised to learn that they claim that building lots more houses should fix it.