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What are the benefits to a city and its local inhabitants of a foreigner buying an existing residential home that it will not inhabit? It supplies a property f
by barrkel 9y ago
What are the benefits to a city and its local inhabitants of a foreigner buying an existing residential home that it will not inhabit?
It supplies a property for rent (i.e. it's not like the property disappears), and the extra demand increases the value of properties the locals own.
I think it's only really problematic if capital is cheaper for foreigners than locals.
In that I mean, I feel you'll only get foreign investment to grow your city once its already too expensive to live in. As they build more and it becomes affordable again, they'd stop investing, and it will become unaffordable again. Keeping the city in a perpetual state of unaffordability.
I don't see how this logic is restricted to foreigners. The argument seems to be universally applicable, which makes me suspicious: why wouldn't investment grow the city until rent falls to the cost of capital + maintenance etc.?
(I think the argument doesn't actually work because of the nature of property: location, amenities, services, community; things whose supply isn't easily increased simply by capital. But if it did work to some extent, it would still apply to nationals just as well.)
- ksec 9y agoThe problem? They don’t really rent them out. Even if they do, they are highly unlikely to rent it for a below or market price. Basically many of these investment aren’t really asking or looking for return. They are like buying a brand new car and let it Stay there until you use it. Which rarely happens.
- barrkel 9y agoThere was talk that that was the case in London, but it's not really true when you look at the statistics; it turns out that no more than 1% or so (usually ultra-high-end properties) are bought by foreign investors and not let out. And I think London has this problem far worse than most other places.
- ksec 9y agoLondon, Vancouver and Hong Kong as well which is far worst then any place on earth.
- naasking 9y ago> the extra demand increases the value of properties the locals own. Which is exactly the problem. Housing is for living, not speculating. Basic human needs should probably not be subject to such speculation. That said, regulations in building new housing can also exacerbate this problem. At the very least, density should be increasing at approximately the rate of population growth in a region, or you will obviously have a growing sprawl problem.
- conanbatt 9y ago> Which is exactly the problem. Housing is for living, not speculating. Basic human needs should probably not be subject to such speculation. You are looking at the wrong culprit. If there is a piece of undeveloped land, and a foreigner builds a house completely uninhabited, the housing stock in the market has a delta of 0. If there is an owner that sells their house to a foreigner and buys a new one, the housing stock is till the same. They dont affect supply in abstract, they affect supply if there are significant zoning restrictions that do create artifical scarcity.
- naasking 9y ago> If there is a piece of undeveloped land, and a foreigner builds a house completely uninhabited, the housing stock in the market has a delta of 0. If there is an owner that sells their house to a foreigner and buys a new one, the housing stock is till the same We're not talking about supply, we're talking about price. The OP said, "and the extra demand increases the value of properties the locals own." Increasingly unaffordable housing is exactly the problem.