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The Forum > Article Comments > Does housing supply impact on inequality? > Comments

Does housing supply impact on inequality? : Comments

By Alan Davies, published 7/7/2014

Throttling dwelling supply has a pernicious effect on housing affordability and consequently has negative distributional consequences.

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We seem to be thinking that increasing the number of new housing approvals is a goal or something to be achieved, but basing an economy on real estate is likely to produce a very fragile economy.

The GFC was caused by a real estate bubble in the US. Countries such as Ireland and Spain also had a real estate bubble, and when it burst it had a huge negative effect on their economies.

If (or when) the real estate bubble in China finally bursts, it could wreck the economies of many countries around the world.

I would therefore question the necessity for a population increase, so as to have more new houses, and base so much of our economy on the buying and selling of real estate.

With a stable population, there is minimal need to destroy our beautiful countryside to build more houses.
Posted by Incomuicardo, Wednesday, 9 July 2014 11:50:12 AM
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Oh please, you canít meaningfully write an article about this subject without even mentioning rapid population growth and hence the rapidly increasing demand for housing, with no end in sight.

If the demand is going to just keep increasing, then it wonít be a matter of high-rise and urban consolidation, or urban sprawl. Itíll be both.

< Mr Guy therefore needs to make sure that his proposed alternative sources of supply, especially urban renewal areas, have the muscle to keep up with demand. >

No. It should not just be about keeping up with demand. The development of housing needs to happen hand in hand with a demand-stabilisation policy, ie; reducing immigration to net zero so that we can head towards a stable population.
Posted by Ludwig, Wednesday, 9 July 2014 8:39:08 PM
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