Even supply doesn’t fix a supply issue.

Housing is confounding, we are at a frustrating juncture where after a massive property crash brought about in part by a glut of housing we now have the opposite situation of a housing shortage in many areas.

Solutions abound, but no matter what happens this shortage is going to persist due to the time it takes to deliver housing and even if we announced a shovel ready, commencing tomorrow plan for 25,000 houses in cities the shortage would persist for at least another two years.

When you see various commentators saying what will or won’t work it’s almost arbitrary because nothing works in the short term, the main ingredient required to fix this is time.

Housing grants to first time buyers may push up prices, even if they don’t it doesn’t of itself create supply today. Many of the proposals will serve one side of a transaction without affecting price.

If we got rid of VAT would house prices drop? Or would developers merely pocket the additional income because of the fact that a price set during a shortage becomes the ‘clearing price’ and the underlying costs are not deeply considered by the buyer due to a lack of alternatives?

Reduced costs or grants to buyers is about choosing sides in a battle where the enemy is neither of these two parties, so it would be like going to war in Australia to fight ISIS. The problem is a systemic one that needs a root and branch set of changes with an acceptance that these changes will take at least a decade to implement and that in interim we will continue to have housing problems.

In a world of short termism and single electoral cycle politics this is highly unlikely to occur.


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