Current model of why property prices remain high in many ‘big’ cities in western countries despite the fix being ostensibly very simple (build more homes!)
Actively expanding supply requires (a lot of) effort and planning. Revising zoning restrictions, dealing with NIMBYs, expanding public infrastructure, getting construction approval etc.
In a liberal consultative democracy, there are many stakeholders, and any one of them complaining can stifle action. Inertia is designed into the government at all levels.
Political leaders usually operate for short terms, which means they don’t reap the political gains of long-term action, so they’re even less inclined to push against this inertia.
(There are other factors I’m ignoring, like the role of private equity in buying up family homes, or all demand-side factors)
Implication: The housing crunch is a result of political malaise / bad incentives, and as such we shouldn’t expect government to solve the issue without political reform.
Incentive (for builders and landowners) is pretty clear for point 1. I think point 3 is overstated—a whole lot of politicians plan to be in politics for many years, and many of local ones really do seem to care about their constituents.
Point 2 is definitely binding. And note that this is “stakeholders”, not just “elected government”.
Current model of why property prices remain high in many ‘big’ cities in western countries despite the fix being ostensibly very simple (build more homes!)
Actively expanding supply requires (a lot of) effort and planning. Revising zoning restrictions, dealing with NIMBYs, expanding public infrastructure, getting construction approval etc.
In a liberal consultative democracy, there are many stakeholders, and any one of them complaining can stifle action. Inertia is designed into the government at all levels.
Political leaders usually operate for short terms, which means they don’t reap the political gains of long-term action, so they’re even less inclined to push against this inertia.
(There are other factors I’m ignoring, like the role of private equity in buying up family homes, or all demand-side factors)
Implication: The housing crunch is a result of political malaise / bad incentives, and as such we shouldn’t expect government to solve the issue without political reform.
Incentive (for builders and landowners) is pretty clear for point 1. I think point 3 is overstated—a whole lot of politicians plan to be in politics for many years, and many of local ones really do seem to care about their constituents.
Point 2 is definitely binding. And note that this is “stakeholders”, not just “elected government”.