5 ms·

In modern life,you have a house as a service™. Jokes aside, why the prices are so high in some countries?

beaconstudios 5y ago
Buy to let, property speculation, property as investment. Basically, houses are being used to serve profiteering much moreso than actually housing people affordably.
- zip1234 5y ago
  This is not the reason. The reason is a supply shortage caused by bad policy that restricts building. This might have some tiny impact on it, but is not the root cause. In Vancouver they did a tax on property speculation. Prices continue to rise because demand > supply and Vancouver has the same dumb policies as in the US.
  - beaconstudios 5y ago
    That can also be true, but let me point to this: https://openhousing.ca/2020/12/30/vancouver-empty-homes-crossed-30000-mark-this-year/ https://openhousing.ca/2020/12/30/vancouver-empty-homes-cros... That's a lot of un-lived-in houses.
- jl2718 5y ago
  Mostly government loan programs and tax breaks. Also, because it’s a non-custodial physical asset, countries that allow foreign ownership get a lot of real estate investment from money laundered out of more financially-repressive countries.
crowbahr 5y ago
Because building housing is effectively illegal in much of the US. Single family zoning, NIMBYism, moral panics over public transit, suburbanism... the list goes on and on. Building duplexes is a start but Seattle should look a lot more like Brooklyn than like Idaho Falls: 6 story apartment buildings everywhere. Density. Public transit galore with very restricted parking. Only then would housing prices be reasonable.
- belligeront 5y ago
  And if you wait to long to allow building, you get stuck in a negative feedback loop where people who work in the building trades get priced out of a city, so construction costs spiral out of control too.
- inglor_cz 5y ago
  It is not just the US, though. Prices are crazy almost everywhere. I was born in a city that lost 40 000 people over the last generation. From 320 000 people to 280 000 people. A Central European rust belt city called Ostrava. And the real estate prices there made a huge jump in the last three years. Not as huge as in Prague, but +50 per cent nonetheless. Lots of those apartments are actually empty and cannot attract tenants, because there just isn't enough demand on the rental market. But they still sell like hot buns at a bakery. I believe this is caused by the fear of inflation combined with relatively low mortgage interest rates. People don't want to have cash in hand.
  - mcguire 5y ago
    A hypothesis: In the US: Interest rates. Interest rates are low, so mortgage rates are low, so there is a crap-ton of money going after what is effectively a fixed resource. Outside the US: Investments. A lot of people have made a shit-ton of money from low-interest-rate investments like the stock market in the last decade. These people are looking for places to put said money, including real estate in out of the way places. Once again, a lot of money going after fixed resources.
    - hparadiz 5y ago
      Residences that are empty for more than 1 year should be taxed triple.
    - inglor_cz 5y ago
      "Interest rates are low, so mortgage rates are low, so there is a crap-ton of money going after what is effectively a fixed resource." This is a case in Europe, too, especially in the Eurozone, where interest rates are kept very low by the ECB to keep heavily indebted countries afloat.
inglor_cz 5y ago
The # of dollar millionaires in the world is at all time high, at the same time there are fears of rampant inflation. So people who can do it sink a lot of their money into real estate.
PragmaticPulp 5y ago
> Jokes aside, why the prices are so high in some countries? This is localized to specific cities, not the entire country. (Though country-wide home prices are also up, just not into the millions like this). The reason is that people want to live in these specific places, but they can't build upward fast enough to hold everyone who wants to move in. So instead, new buyers compete over the same housing inventory and the current residents never want to sell because they're afraid they may never be able to buy back into the city in the future. Seattle does have some major problems right now, but it's not literally a lawless wasteland. I think most of us believe that the city will get on top of the social issues eventually, at which point it becomes even more attractive to live in Seattle and the prices go up even more.
avereveard 5y ago
There's a negative difference between mortgages and inflation, fuelled by the ridiculously low interest rates. Anyone that has the down payment to invest in property is making bank, that is, until it'll all come down crashing again.
throwaway3b03 5y ago
> Jokes aside, why the prices are so high in some countries? Prices of all assets has skyrocketed in the last few years. Part of the blame for that is speculated to lie on the ZIRP (Zero interest-rate policy). Real estate all throughout the developed world has seen a lot of money going into it, as has the stock market as well. Most people agree everything is overinflated right now and a correction will come, but that sentiment has been around since around 2016. I don't think a violent crash will come without another event to cause it, but I wouldn't be surprised by a plateau or a stagnation in prices for a few years.

Buy to let, property speculation, property as investment. Basically, houses are being used to serve profiteering much moreso than actually housing people affordably.

zip1234 5y ago
This is not the reason. The reason is a supply shortage caused by bad policy that restricts building. This might have some tiny impact on it, but is not the root cause. In Vancouver they did a tax on property speculation. Prices continue to rise because demand > supply and Vancouver has the same dumb policies as in the US.
- beaconstudios 5y ago
  That can also be true, but let me point to this: https://openhousing.ca/2020/12/30/vancouver-empty-homes-crossed-30000-mark-this-year/ https://openhousing.ca/2020/12/30/vancouver-empty-homes-cros... That's a lot of un-lived-in houses.
jl2718 5y ago
Mostly government loan programs and tax breaks. Also, because it’s a non-custodial physical asset, countries that allow foreign ownership get a lot of real estate investment from money laundered out of more financially-repressive countries.

crowbahr 5y ago

Because building housing is effectively illegal in much of the US. Single family zoning, NIMBYism, moral panics over public transit, suburbanism... the list goes on and on. Building duplexes is a start but Seattle should look a lot more like Brooklyn than like Idaho Falls: 6 story apartment buildings everywhere. Density. Public transit galore with very restricted parking. Only then would housing prices be reasonable.

belligeront 5y ago
And if you wait to long to allow building, you get stuck in a negative feedback loop where people who work in the building trades get priced out of a city, so construction costs spiral out of control too.
inglor_cz 5y ago
It is not just the US, though. Prices are crazy almost everywhere. I was born in a city that lost 40 000 people over the last generation. From 320 000 people to 280 000 people. A Central European rust belt city called Ostrava. And the real estate prices there made a huge jump in the last three years. Not as huge as in Prague, but +50 per cent nonetheless. Lots of those apartments are actually empty and cannot attract tenants, because there just isn't enough demand on the rental market. But they still sell like hot buns at a bakery. I believe this is caused by the fear of inflation combined with relatively low mortgage interest rates. People don't want to have cash in hand.
- mcguire 5y ago
  A hypothesis: In the US: Interest rates. Interest rates are low, so mortgage rates are low, so there is a crap-ton of money going after what is effectively a fixed resource. Outside the US: Investments. A lot of people have made a shit-ton of money from low-interest-rate investments like the stock market in the last decade. These people are looking for places to put said money, including real estate in out of the way places. Once again, a lot of money going after fixed resources.
  - hparadiz 5y ago
    Residences that are empty for more than 1 year should be taxed triple.
  - inglor_cz 5y ago
    "Interest rates are low, so mortgage rates are low, so there is a crap-ton of money going after what is effectively a fixed resource." This is a case in Europe, too, especially in the Eurozone, where interest rates are kept very low by the ECB to keep heavily indebted countries afloat.

inglor_cz 5y ago

The # of dollar millionaires in the world is at all time high, at the same time there are fears of rampant inflation. So people who can do it sink a lot of their money into real estate.

PragmaticPulp 5y ago

> Jokes aside, why the prices are so high in some countries? This is localized to specific cities, not the entire country. (Though country-wide home prices are also up, just not into the millions like this). The reason is that people want to live in these specific places, but they can't build upward fast enough to hold everyone who wants to move in. So instead, new buyers compete over the same housing inventory and the current residents never want to sell because they're afraid they may never be able to buy back into the city in the future. Seattle does have some major problems right now, but it's not literally a lawless wasteland. I think most of us believe that the city will get on top of the social issues eventually, at which point it becomes even more attractive to live in Seattle and the prices go up even more.

avereveard 5y ago

There's a negative difference between mortgages and inflation, fuelled by the ridiculously low interest rates. Anyone that has the down payment to invest in property is making bank, that is, until it'll all come down crashing again.

throwaway3b03 5y ago

> Jokes aside, why the prices are so high in some countries? Prices of all assets has skyrocketed in the last few years. Part of the blame for that is speculated to lie on the ZIRP (Zero interest-rate policy). Real estate all throughout the developed world has seen a lot of money going into it, as has the stock market as well. Most people agree everything is overinflated right now and a correction will come, but that sentiment has been around since around 2016. I don't think a violent crash will come without another event to cause it, but I wouldn't be surprised by a plateau or a stagnation in prices for a few years.