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But isn’t land ownership and renting free markets? If there is profit to be made by renting out land, investors should look to buy land to rent out, since both
by hjk05 8y ago
But isn’t land ownership and renting free markets? If there is profit to be made by renting out land, investors should look to buy land to rent out, since both the land market and pool of renters are limited this should naturally drive up prices of land while driving down rents. And as such you should move towards buying land to rent out becoming a very low margin business and renters end up paying only marginally more than they would if they bought the land themselves.
That’s in theory though, so what’s keeping this from happening in practice?
- Dayshine 8y agoBecause the higher house prices are, the less people can afford to buy (to live). Those people then need to rent, increasing demand for rental, so rental prices go up too. When housing bubbles burst, rental prices go up. I really don't think it's a free market because people must live somewhere. Further, banks only let you have one normal mortgage, so you can't buy multiple properties unless you're already wealthy.
- youngtaff 8y agoThere's a case that house prices are artificially high as house builders build at a rate that allows them to drip feed houses onto the market House building companies in the UK have something like 800,000 plots that permission is granted on but yet they're not building on
- CryptoPunk 8y agoThat wouldn't be a sustainable pact. Any builder could profit by breaking it and there would be nothing the colluding builders could do about it. Builders have an incentive to liberalize development laws and do push for upzoning. It's those who own condos who have an opposing financial interest in limiting development. Beyond financial interests there are NIMBY and other cultural interests that seem to be decisive, like heritage preservation. There is also bureaucratic inefficiency limiting housing development by imposing lengthy and expensive processes for getting permits and approvals.
- Dayshine 7y agoWhat's a condo? What's upzoning? I haven't come across these terms in the UK, are you sure they're relevant?
- CryptoPunk 7y agoA condo is an apartment unit in a building where units can be owned individually. Upzoning means changing the zoning laws of the neighbourhood where the property is situated to allow taller buildings with more square footage of living space. Many neighbourhoods have zoning laws that impose height limits that prevent high-density developments, and this constrains growth in the supply of housing.
- youngtaff 7y agohttps://www.telegraph.co.uk/business/2019/04/19/housebuilders-sitting-800000-home-land-bank-property-crisis/amp/?__twitter_impression=true https://www.telegraph.co.uk/business/2019/04/19/housebuilder...
- Tempest1981 7y agoThe builders also say they're short of workers. Or they aren't paying them enough. Or we lack less-skilled immigrant laborers: https://www.mercurynews.com/2019/04/14/opinion-california-cant-build-housing-without-investment-in-workforce/ https://www.mercurynews.com/2019/04/14/opinion-california-ca... = http://archive.is/m8ZyV http://archive.is/m8ZyV
- TheCoelacanth 8y agoNot sure how it's "free markets" to distribute land to the people good at conquering things and then let their descendants hang on to it for the next 1000 years.
- hjk05 7y agoThere’s a realeastate market, we agree on that right? That market is a free market in the econ 101 sense is what I’m saying. You are questioning whether it is morally fair that the world is the way it is. That has nothing to do with my post.