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Housing demand consists of both demand for residences, and demand for investments (both apreciating, and as stores or transfers of wealth).

That second demand can be huge, favours already hot markets (appreciation, liquidity, long-term durability of value), and can suck up unholy amounts of investment leading to very little actual housing supply created.

Ironically, the best way to promote more housing supply in such markets is likely to reduce prices, Both through increased supply (densification, new construction, relaxed zoning and codes favouring these), and through increased land value tax, which both eats up investment and store-of-wealth value, and encourages development in order to meet increased carrying costs.

Vested interests, from homeowners to real estate brokers to banks, will resist such measures as they directly reduce the value of their asset portfolios.

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