8 ms·

As another commenter notes, housing is unaffordable because marginal demand is greater than marginal supply. We can either decrease demand, or increase supply.

• mupuff1234 5y ago
  Only if you think that the demand for real estate is mostly driven by housing needs, and not speculation & monopoly style hoarding artificially driving prices higher.
  • deleted 5y ago
    [deleted]
  • qeternity 5y ago
    Without a doubt, it is not mostly driven by those things. Investors have lots of choice about what to invest in. People don’t have any choice about needing shelter. They will pay whatever the price is. I get that wealthy investors driving up housing prices gets people angry and is a good rallying cry. But it’s such a small piece of demand.
    • mupuff1234 5y ago
      Define small? Even an additional 2-3% increase in supply can have quite a large affect on prices. For example, pre-covid, there was a vast number of vacant apartments in NYC. https://www.6sqft.com/nearly-250000-nyc-rental-apartments-sit-vacant/ https://www.6sqft.com/nearly-250000-nyc-rental-apartments-si... But also being in NYC during COVID and watching the real estate market react, it feels far from an efficient market, as one side has more information, resources and time. https://www.businessinsider.com/new-york-city-rent-deals-landlords-holding-apartments-2021-3 https://www.businessinsider.com/new-york-city-rent-deals-lan...
• djrobstep 5y ago
  Please stop saying this - house prices in Australia have recorded record growth in the same year as record low immigration due to covid restrictions. The primary driver is low interest rates enabling cheap debt, not "supply".
  • rce 5y ago
    Thanks for mentioning interest rates as well. Though I don't know that it counters the original point. Things can have multiple causes. Both limited supply and low interest rates can be major contributing factors.
  • Spooky23 5y ago
    Many HN posters are California based, and apply the weird nuances of that market with everyone. The demand side of capital is underrated because it’s hard to see. Normal folks don’t realize that managers of large funds are doing previously impractical things like buying suburban subdivision homes because they have access to unlimited capital and can offload/distribute risk.
  • foobar33333 5y ago
    The prices in Australia are based on forecasted demand. Since there is almost a 100% chance that the population of tomorrow will be greater than today, that means you can buy on higher prices than current demand. Unfortunately that means houses can be considered worth almost infinite dollars since the population will keep going up.
    • mmerlin 5y ago
      Let's not forget the Liberal Party recently throwing out the fairly-newly-enacted loan suitability consumer protection laws, so that the mortgage brokers could reduce compliance and go back to the boomtime days of being the legal human shields (plausible deniability buffer) for the banks to allow larger and larger liar loans, which are 1 in 3 source... abc.net.au and anectodally, I subleased my office from a mortgage broker for years, saw how much they fiddled the figures for people to get MASSIVE loans they will never pay off. I also recoded a lot of their compliance CRM for them when these now-discarded consumer protection laws first came into effect.. and was shaking my head in disgust at Frydenberg... no wonder Hayne would not shake that man's hand... https://www.theguardian.com/global/video/2019/feb/01/awkward-commissioner-hayne-declines-to-shake-josh-frydenbergs-hand-video https://www.theguardian.com/global/video/2019/feb/01/awkward...
• TeMPOraL 5y ago
  That may be technically true, but it misses the fact that the demand pool is larger than it should be - it consists of many other actors than just people who want to live in a given location. Those other actors tend to have more money.
  • notanzaiiswear 5y ago
    Who exactly are you talking about?
    • bo0tzz 5y ago
      Investment types
    • TeMPOraL 5y ago
      Investors who do not rent out locally - including those renting out to tourists, those keeping empty homes for occasional vacation use, those keeping empty homes because they're playing financial shenanigans (moving money offshore, money laundering, keeping some properties empty to prevent depressing rents from nearby properties). Probably some other groups I'm not even aware of. Point being, it's not true that all supply of homes ends up being used by people to live in. A lot stay empty most, or all, of the time. People owning those tend to have more money than locals looking for a place to live, so the latter get priced out.
      • qeternity 5y ago
        This is a really really small part of demand. And unlike dwellers, investors have alternatives to invest in if prices get too high. But investors are really not the main problem. If you banned housing investment, prices would hardly budge.
• swiley 5y ago
  Deport illegals and halt immigration? Or genocide followed by an ethnostate?
  • helge9210 5y ago
    > Deport illegals and halt immigration? Halting immigration will result in shrinking economy.
    • bombcar 5y ago
      A shrinking economy will drop house prices.
      • jlokier 5y ago
        And reduce average incomes. I wonder which one drops faster.
• HappyTypist 5y ago
  Without regressing to another ad-infinitum housing discussion, real estate involves two markets: rentals/living, and ownership. Some people want to own their own home and live in it (owner occupiers); these people however compete with investors who are seeking to rent it out. While investors don't directly affect the rentals market (as you'd expect an owner-occupier to not be a renter), they do push the price of housing, because housing becomes more of an investment (competing against everything else with zero / negative interest rates). Progressive taxes on investors can mitigate this and make home ownership more affordable. First property, no tax. Second property, 1% of its land value charged annually. Third property: 2% of its land value, etc...
  • mattmanser 5y ago
    Then you just get thousands of holding companies.
    • wizzwizz4 5y ago
      So be really aggressive about associating holding companies with their owners for the purposes of this tax.
    • postingawayonhn 5y ago
      You can just use a simpler land tax system. Owner occupier properties exempt. Investor owned properties X% per year.
      • Ekaros 5y ago
        I wonder wouldn't it be just simpler to ban private land ownership in cities.
        • imtringued 5y ago
          This idea is slightly better than a land value tax but implementing it is a financing nightmare. You'll have to spend the entire government budget on buying all private plots of land.
• parasight 5y ago
  Buying the apartments is a short term solution to take pressure off of low income tenants. This is not about supply and demand. Increasing supply is a mid to long term solution. By the way, land is also limited in Berlin and therefore expensive. Makes building cheap apartments difficult.
  • djbebs 5y ago
    Land is limited for political reasons.
    • hezag 5y ago
      Unless you are talking about borders or about the concept of property, land is not limited for political reasons. It's limited for physical reasons.
      • iso1210 5y ago
        The number of apartments per square metre is limited by political reasons (ban on high buildings, minimum size etc) 20 years ago when I moved to London I'd have loved to find a tiny self contained Japanese style 10 square metre apartment[0], which is cheaper (in actuality, not just inflationwise) and far nicer and featureful than the HMO I ended up in. https://www.livingbiginatinyhouse.com/tiny-house-tours/tiny-tokyo-apartment/ https://www.livingbiginatinyhouse.com/tiny-house-tours/tiny-...
        • brigandish 5y ago
          > Thankfully, some clever design elements allows the micro apartment to be a very functional and cosy home. Does anyone who has lived in Japan and abroad think there is anything "cosy" about Japanese housing? It's cramped, of poor quality, and manages to be colder than the outside in winter and warmer than the outside in summer. I've seen some crap properties in London but Japan takes the biscuit.
          • 5y ago
• littlecranky67 5y ago
  Housing in Berlin is not unaffordable, else the occupancy of those houses wouldnt be so high.
  • dathinab 5y ago
    It's not that simple. Affordable housing in Berlin means: - "Normal" people working in Berlin can afford it (e.g. prices are still below e.g. Munich but you ear much more in Munich). - You are not forced to spent so much money on housing that you not can't really afford anything else. - We are speaking about apartments available now, there are a lot of people with older rental contracts which as such still pay much lower rents. (I.e. the price of entering a new rent contract is basically always noticeable above the average rent price, often as much as legally possible). You can totally have "unaffordably" priced housing and high occupancy, because housing is in general not a think people can choose to "simply not have". Also if you decrease the supply of "affordable" housing and make the remainder more expansive you totally can have an effect where occupancy stays high and people and up on the street (decrease the supply => convert rented apartments to owned ones, which don't count into "rented apartments occupancy"). So what you see is: - More WGs i.e. people sharing a apartment and the rent, and this is not just young people. - A lot of "natives" moving away from Berlin. - A lot of rented Appartments being converted to owned ones, some being actually used other not. - A lot of people with non-high wage jobs spending so much money on rent that they have no money left to put aside for emergencies and potentially even have to cut corners in their daily live. - Some more wealth people coming to Berlin. One major difference to some of the more expensive cities in Germany is that people people tend to earn much less money and thinks like "moving to a cheaper metro area around Berlin" are often not really viable (as there isn't that much to move to, it might actually be more expansive then living in Berlin it also is legally seen another German state and commute times can become a problem, too. I mean they can be a problem in-side of Berlin, it's a pretty wide city.)
    • luckylion 5y ago
      > One major difference to some of the more expensive cities in Germany is that people people tend to earn much less money I don't know. According to a somewhat recent study[1], Berlin is pretty average, only 10-20% below e.g. Hamburg, North Rhine-Westphalia, Bavaria and Baden-Württemberg (where the rents for comparable flats in the larger cities tend to be much higher than in Berlin, and not just 10-20%, while cost of living (utilities, meals, services) is generally 10-20% lower in Berlin). It's true that the current prices do get obscured by looking at averages, especially in Berlin where old contracts are absurdly cheap. Comparing the usual real-estate sites in Germany (granted, most markets aren't exactly showing many offers, so it's always a small sample, but it remains the same over time), you'll find that Berlin's rents are still considerably lower than those in Hamburg, Munich, Dusseldorf etc. Berlin is in a very special situation in Europe in that the capital of the country is not anywhere close to being the most expensive population center. As for "natives" moving out of Berlin: not so sure either, many Berliners weren't born in Berlin, but that has been going on for the longest time (it's been a thing a hundred years ago, has settled during the GDR, and has been reignited in the last two decades; today, slightly over half of Berlin residents were not born in Berlin). It's a city where young people move to study and party and then stay for the life style and lower cost of living. Coincidentally, these are often the same people complaining about the high rents and asking for collectivization. [1] https://www.bz-berlin.de/berlin/berliner-liegen-mit-42-525-euro-beim-gehalt-auf-platz-neun-in-deutschland https://www.bz-berlin.de/berlin/berliner-liegen-mit-42-525-e...
• bjackman 5y ago
  Demand for _homes_ is sticky. Demand for property ownership is not at all! It is influenced by speculation and rent-seeking. We can easily cripple both those things and reduce housing cost. (Edit: I do agree with your conclusion though. We need more homes)
• Valakas_ 5y ago
  Yes but there are 2 main types of demand in there. Demand coming from institutional and extremely wealthy investors and demand from regular folks. Who do you think is more likely to be the responsible for such an increase in price? So i disagree with the solution you propose. The better solution is to reduce the type of demand that is responsible for this failure in housing prices.
  • qeternity 5y ago
    > Who do you think is more likely to be the responsible for such an increase in price? They of course are contributing factors and if you want to regulate that, fine, go ahead. But they absolutely are not driving prices higher. Investors have tons of alternatives to invest in if prices are too high. People don’t have alternative forms of shelter, so they will tend to pay whatever the price is. And society facilitates and exacerbates this through well meaning efforts like “affordable housing” policies that artificially reduce interest rates and drive demand higher. The bigger issue is that housing and property should never have become a de facto investment class. You should not earn inflation adjusted returns for owning a house. But of course, most wealth in the world is due to housing. And the next generations just increasingly get screwed over.
• thazework 5y ago
  Berlin's population hasn't increased significantly since the end of WW2. There may be desirable areas that are experiencing demand spikes but the price increase seems city wide. Why is supply more of an issue right now? It is a question of (money) supply.
• KoenDG 5y ago
  Commercially backed mortgages. The reason it doesn't work the way you're describing. Supply and demand do not exist in a vacuum. There's no _immediate_ response to people not being willing to pay a certain amount. Owners, and especially individuals or companies that own large amounts of housing, will refuse to lower prices, regardless of demand dropping. Be it actual demand, or people staying away because the price is too high. Because they have the power to do that. I invite you to watch these little documentaries on new york city: https://www.youtube.com/watch?v=Zjd1WNhGliY&list=PLkVbIsAWN2lt_n88l7WC2u22TRHKmw8ya https://www.youtube.com/watch?v=Zjd1WNhGliY&list=PLkVbIsAWN2... Where store spaces have not been rented out for sometimes a decade, because owners consistently refuse to lower prices. Just refusing to lower rent, for years on end, and being empty that entire time. And if you ask why, the answer is: commercially backed mortgages. It's simply: you take a loan with a bank for, say, 10 million USD. You're required to pay this loan back over a period of 10+ years. The bank, meanwhile, sells this as an investment product. The bank uses their own funds to guarantee the profit this loan is going to generate, and attracts investors to take a part of it. Thus gaining them a % increase after X years. However, this means that you can't ever lower the amount you have to pay back, if the value of the physical good your property is based on, drops. Price isn't dynamic in a pure sense. There's a person on the controls and if they refuse to move them, even if you think it's illogical to do so, they're not going to budge. Because they have a loan to pay back. Over a finite amount of years. And lowering rent means longer time to pay back the loan, meaning breach of contract. There are far more systems in place than many are even willing to consider. For it assaults their idealized worldview. Be it shop or regular housing, this is a system that artificially stops prices from dropping.
  • qeternity 5y ago
    Yes and no. Yes, property investment and speculation and inflate prices beyond their consumptive utility. But no in the sense that commercial real estate investors are a small chunk of the global RE market. The vast majority of residential property are owned by the tenants. We have turned housing into the largest retirement fund and don't have a way of undoing that. And we have exacerbated this by deciding to push interests rates artificially low so that all sorts of people who otherwise would be priced out of home ownership, are now part of the demand curve competing against the same supply curve.