The issue of housing affordability comes up a lot on HN and the discussion often turns to a shortage of supply. Often overlooked is the demand side of the supp

The issue of housing affordability comes up a lot on HN and the discussion often turns to a shortage of supply. Often overlooked is the demand side of the supply and demand equation. From my perspective (mostly familiar with the NZ/AU markets), this is where the real problem lies. Statistics New Zealand have collected data on the total number of private residences and the total number of households since the mid-90s. The difference between the two has almost doubled to around 7.5% nationally. There are substantially more empty or under-utilised residences in a time where every politician is telling us that building more houses will fix the problem. It won't. At best it will alleviate the problem. Prosper Australia's Speculative Vacancies Report [0] (looking at water usage to determine under-utilised properties) suggests areas with high vacancy rates in Melbourne correlate with areas where capital gains (i.e. percentage price increases) are greatest. This is the opposite of what you would intuitively expect in a naive supply and demand equation - desirable areas have higher vacancy rates, even approaching 20% by their reckoning. A study in the UK [1] using council data found that high property prices correlate strongly with what the study refers to as 'low use properties' (LUPs). I wouldn't be at all surprised if the situation is the same in the Netherlands. All of this suggests that demand for investment, not demand for housing is driving prices up. Zoning restrictions and other regulations do play a part, but I think in many cases their influence on the larger picture is overstated. Cheap loans, leverage, and favourable taxes make property a good investment. The only solution is to make property investment less attractive. A land value tax - though politically difficult - seems to me to be a good option. [0] https://www.prosper.org.au/wp-content/uploads/2019/04/Speculative-Vacancies-9.pdf https://www.prosper.org.au/wp-content/uploads/2019/04/Specul... [1] https://theodi.org/event/friday-lunchtime-lecture-empty-homes-and-house-prices-is-there-a-relationship/ https://theodi.org/event/friday-lunchtime-lecture-empty-home...