Housing shortage

[I1L2T3]

To answer a few queries on here, builders and developers may create the houses but they rarely, if ever, finance them. In general, as with most things, the banks control the supply. Banks have a vested interest in keeping the housing stock under the level that is actually required. Build too many and the value begins to level or fall, which may lead to the collateral they hold, slipping into neg-eq. Banks and large corporations control the supply and demand of everything, from houses to your cup of coffee, its the system.

 

 

 

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Very true. Corporations will generally do what is best for them, even if that is at odds with what people need.

 

That is the point where governments need to step in. The problem with governments of the last 30 years is they are always happy to step in and meddle with markets but intervention is generally loaded in favour of corporates. It's why we have second class utilities, it's why we have crumbling infrastructure, it's why that when the housing market is meddled with it has the opposite effect of what is really needed - booming prices instead of stable prices.

 

I think this is a thread where nearly everybody can actually be right in some way. Each poster may place more importance on their own pet theories but I haven't read anything on here that is totally wrong. If chemist comes along and talks about land tax, planning and nimbys he/she is right. People are right to point at developers, at government policy, at banks, at immigration adding pressure. Everything adds to the mix.

[Cyclone]

To answer a few queries on here, builders and developers may create the houses but they rarely, if ever, finance them. In general, as with most things, the banks control the supply. Banks have a vested interest in keeping the housing stock under the level that is actually required. Build too many and the value begins to level or fall, which may lead to the collateral they hold, slipping into neg-eq. Banks and large corporations control the supply and demand of everything, from houses to your cup of coffee, its the system.

 

 

Banks would only be concerned with negative equity if they were expecting a rising number of defaults though. They don't really care how much the house is worth, so long as the mortgage is going to continue to be paid.

 

And their criteria for lending to a developer would primarily be based on whether they think that the developer has a good business plan and will turn a profit (and thus make their repayments).

 

I don't think the banks are involved in any conspiracy to keep the house supply suppressed.