Saturday, November 14, 2009

To Lower Prices, BUILD HOUSES

If the State wants house prices to fall it needs to build more houses. By building more houses and charging the fair price of land and construction (not the retail price of the market) it will increase supply and lower prices.

The current housing market does not work to lower prices, except in crises (when everything falls). The house price bubble is reinforced by the vested interest of all suppliers. They effectively form a collective monopoly whose only interest is higher prices. This bubble will not be burst without the intervention of a supplier whose interest is not in higher prices, but fair prices. This may be social entrepreneurs (no sign of them yet), but could most likely and reliably be the State, as it already owns land.

If the will is there, more houses, at fair prices, built well-insulated and secure, can be supplied to break the back of the housing market. Putting a plentiful supply of quality houses at fair prices on the market will force the price of the existing housing stock (which is generally poor) to compete on price, and the price will fall.

If we want this, we can have it. Demand it.


No comments:

Post a Comment

Note: Only a member of this blog may post a comment.