The basis for this articles' argument^ is not really empirical. It's theoretical. And rational in the sense that it models theory to create predictions... It is quite a cherry-picked collection of published studies, not a metastudy.
Anyway, the crux of theoretical argument is "supply and demand... duh." This is often true, depending on the market, but... it really depends on the market. For real estate, "focusing on supply" often leads to understating the significant "out of theory" factors.
For example, real estate "demand," is largely determined by mortgage availability. That's the source of funds. Besides this, British real estate is an investment class with prices affected by rates, performance of other asset classes, and such. These are big factors.
Dublin city, not far, basically conducted an unscripted experiment in this space during 2008-2015. Lending collapsed. Demand collapsed. Lending was gradually restored, and median house values tracked median approved mortgage max outs. IE, if the average bank agreed to lend $X to the average applicant with an average income... that became the average price. Where the banks (CB, really) created subcategories with special rules (eg single bedroom apartments were mortgage disqualified for a while), those special rules dictated average prices for those categories.^^
This is not surprising when you consider the various leverages and flexibilities of the demand side, compared to the flaccid supply side of the equation.
"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."
Sounds to me that most people just guess. But... this is a disingenuous frame. A 10% increase in (London) housing supply doesn't happen often. That's the point. When it does happen, it rarely happens unless prices hold up. There is no realistic scenario where London is exploding into the sky while a flood of supply crashes prices. This is tunnel-vision, model-only thinking. The supply "lever" he wants to crank is good for fractions of a percent, not 10%.
None of this is to say not to build. If we don't build housing, we cant have more housing. But, house prices are not made in the the council's planning permission basement. This is fantasy.
^"Studies show" is a cop out. Make the argument yourself. Base your arguments on the studies, if convincing. Shots fired :-)
^^In Ireland, this has led to the opposite extreme, and equally erroneous belief that supply is always irrelevant to price.
The basis for this articles' argument^ is not really empirical. It's theoretical. And rational in the sense that it models theory to create predictions... It is quite a cherry-picked collection of published studies, not a metastudy.
Anyway, the crux of theoretical argument is "supply and demand... duh." This is often true, depending on the market, but... it really depends on the market. For real estate, "focusing on supply" often leads to understating the significant "out of theory" factors.
For example, real estate "demand," is largely determined by mortgage availability. That's the source of funds. Besides this, British real estate is an investment class with prices affected by rates, performance of other asset classes, and such. These are big factors.
Dublin city, not far, basically conducted an unscripted experiment in this space during 2008-2015. Lending collapsed. Demand collapsed. Lending was gradually restored, and median house values tracked median approved mortgage max outs. IE, if the average bank agreed to lend $X to the average applicant with an average income... that became the average price. Where the banks (CB, really) created subcategories with special rules (eg single bedroom apartments were mortgage disqualified for a while), those special rules dictated average prices for those categories.^^
This is not surprising when you consider the various leverages and flexibilities of the demand side, compared to the flaccid supply side of the equation.
"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."
Sounds to me that most people just guess. But... this is a disingenuous frame. A 10% increase in (London) housing supply doesn't happen often. That's the point. When it does happen, it rarely happens unless prices hold up. There is no realistic scenario where London is exploding into the sky while a flood of supply crashes prices. This is tunnel-vision, model-only thinking. The supply "lever" he wants to crank is good for fractions of a percent, not 10%.
None of this is to say not to build. If we don't build housing, we cant have more housing. But, house prices are not made in the the council's planning permission basement. This is fantasy.
^"Studies show" is a cop out. Make the argument yourself. Base your arguments on the studies, if convincing. Shots fired :-)
^^In Ireland, this has led to the opposite extreme, and equally erroneous belief that supply is always irrelevant to price.