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The danger is that the experience of your London hosts becomes normalised and the market rent rises to match it.
by conjectures 10y ago
The danger is that the experience of your London hosts becomes normalised and the market rent rises to match it.
- jstanley 10y agoThat's not how market forces work. If you increase the supply, the price goes down, not up.
- deleted 10y ago[deleted]
- conjectures 10y agoYou're probably overlooking the change in the quality of the good. Demand in London is highly elastic. If a lot of new sleeping units come on to the market, they will be filled easily because lots of people want to live there. Now suppose we divide old units of accommodation priced £ in two (halve the slope of the supply curve). The price of a new unit will be close to £. But an old unit then costs nearly 2£. So you have a choice between slum housing and coughing up double the rent.