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Houses built in the wrong place aren’t useful. Also, allowing hoarding of housing (viable since no property tax) can also restrict supply. There are plenty of r

Houses built in the wrong place aren’t useful. Also, allowing hoarding of housing (viable since no property tax) can also restrict supply. There are plenty of reasons why more housing doesn’t necessarily lead to cheaper housing. Even inside 4th ring in East Beijing, we estimated that the block we were living in was only 60% or so occupied (by counting lights on nightly walks), much of the rest of the 40% were probably not even renovated.

eru 2y ago
> Also, allowing hoarding of housing (viable since no property tax) can also restrict supply. I don't see how property tax makes any difference here? The opportunity cost in terms of lost rent (if you are hoarding vacant property instead of renting it out) should be the same no matter what the property tax is? > There are plenty of reasons why more housing doesn’t necessarily lead to cheaper housing. If you can find a market that you can keep adding supply into, and prices don't react, you found yourself an infinite money machine! (It's the same mechanism as when people complained that printing money (whether by the Bank of Japan in the 1990s or the Fed in the 2010) can't raise inflation: Instead of complaining, you should keep printing money and gradually buy up the whole world in return for some ink and paper / database entries.)
- seanmcdirmid 2y ago
  That was China’s thinking, but it turns out there is a limit, it’s just not a gradual slope downward but a huge crash.
  - eru 2y ago
    What makes you think so? The Chinese problems come from different sources. For example, there's lots of corruption, they are not keeping their nominal GDP on a stable growth target, and if I remember right, they have a lot of government intervention in the real estate and credit markets. See https://www.econlib.org/the-confusing-china-debate/ https://www.econlib.org/the-confusing-china-debate/ for an assessment more qualified than mine. And https://scottsumner.substack.com/p/chinas-mysterious-deflation https://scottsumner.substack.com/p/chinas-mysterious-deflati... for something more recent.

eru 2y ago

> Also, allowing hoarding of housing (viable since no property tax) can also restrict supply. I don't see how property tax makes any difference here? The opportunity cost in terms of lost rent (if you are hoarding vacant property instead of renting it out) should be the same no matter what the property tax is? > There are plenty of reasons why more housing doesn’t necessarily lead to cheaper housing. If you can find a market that you can keep adding supply into, and prices don't react, you found yourself an infinite money machine! (It's the same mechanism as when people complained that printing money (whether by the Bank of Japan in the 1990s or the Fed in the 2010) can't raise inflation: Instead of complaining, you should keep printing money and gradually buy up the whole world in return for some ink and paper / database entries.)

seanmcdirmid 2y ago
That was China’s thinking, but it turns out there is a limit, it’s just not a gradual slope downward but a huge crash.
- eru 2y ago
  What makes you think so? The Chinese problems come from different sources. For example, there's lots of corruption, they are not keeping their nominal GDP on a stable growth target, and if I remember right, they have a lot of government intervention in the real estate and credit markets. See https://www.econlib.org/the-confusing-china-debate/ https://www.econlib.org/the-confusing-china-debate/ for an assessment more qualified than mine. And https://scottsumner.substack.com/p/chinas-mysterious-deflation https://scottsumner.substack.com/p/chinas-mysterious-deflati... for something more recent.