> Perhaps OP thinks housing doesn't behave like a normal good
Unfortunately, to some extent it doesn't. House prices go up, especially in a terminally low-interest rate environment, and lots of people with (unearned) equity from that increase pile in buying more as speculative investments. You'd hope that government would step in to break such an obvious vicious circle, but... no, it's no use, I can't keep a straight face.
(Not defending OP's specific claim. Also speaking from a London perspective; YMMV.)
London has the same issues as San Francisco, New York and Vancouver, where housing prices are skyrocketing due to it being almost impossible to build new construction, along with foreign money flowing into real estate in those cities. As such, all new construction is hyper-luxury because those are the only buildings that are worth building in this political climate of NIMBY-ism. The new construction going up was never intended to be purchased by people who need a 30-year fixed to pay for it.
If new construction was going up that was priced in a normal bracket, affordable for mere normal people who had 150k to put down for a mortgage, I would consider that a massive improvement.
There's actually quite a lot of new construction in London, to the extent that some areas have a serious glut with many many years' worth of supply sitting on the market not selling.
The problem here isn't just that what's being built is unaffordable - although it definitely is that - but that it's not what inhabitants want. It's being built to appeal to mostly Asian investors who like shiny high-rise newbuild and will probably never even see their purchases, much less live in them, so you end up with minuscule unit sizes, poor build quality, overheating, insufficient elevators and boilers, all the obvious corners to cut.
Not sure what you mean by "mere normal people who had 150k to put down for a mortgage" - with median London incomes somewhere around £30k, needing a £150k deposit doesn't sound especially normal-friendly. If you meant total price, yes, now you're talking.
>Not sure what you mean by "mere normal people who had 150k to put down for a mortgage" - with median London incomes somewhere around £30k, needing a £150k deposit doesn't sound especially normal-friendly. If you meant total price, yes, now you're talking.
I was being facetious, $750,000 is a totally insane cost for a condo unit, but even that would be far more affordable than what's been going up in San Francisco over the last 10 years.
Demand for normal goods goes down when prices rise. Supply of normal goods goes up when prices rise. Neither is consistently true of housing in the markets we're talking about.
Neither of those is consistently true of any product, you are doing it wrong. Drawing supply and demand curves as a straight line is the economics equivalent of a frictionless surface, or a perfect sphere.
But if you buy an apartment as an investment, and just sit on it, you're not doing anything to affect the price of housing, nor anything to help the housing crisis.
Unfortunately, to some extent it doesn't. House prices go up, especially in a terminally low-interest rate environment, and lots of people with (unearned) equity from that increase pile in buying more as speculative investments. You'd hope that government would step in to break such an obvious vicious circle, but... no, it's no use, I can't keep a straight face.
(Not defending OP's specific claim. Also speaking from a London perspective; YMMV.)