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".
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.
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.
Undoubtedly? I've never seen any real proof of it. It's just kind of a mantra. Housing pricing continues to be a problem in every first world country's urban center. Do they all have the exact same "zoning?" And why now? Did this evil zoning just get enacted now for presumably pointless evil reasons?
"Zoning" to me seems to be a modern version of "kulaks" for neoliberal types that just can't grok that there is something fundamentally rotten in the entire system. And have no real practical solutions to fix it.
It's not surprising that every major urban centre has inflated property prices. Restrictive zoning laws such as the ones studied above are more common than not. San Fran, London, Australia, Berlin, what have you. NIMBYism is the default. Homeowners aren't going to willingly vote away their profits.
Not only is there solid empirical evidence, but it makes evident sense. There is no cap on supply due to the ability to build vertically. Rapidly inflating prices significantly above cost over a multi decade time frame makes zero sense in a market economy without an artificial cap on supply. Gold would be cheap (at cost) if more supply could be invented/constructed, irrespective of how many people wanted to invest.
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.
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...
