How can this be? Relax planning and house prices fall?
But, but, we’ve everyone and their Granny insisting to us that housing is different. Housing doesn’t work like anything else, supply and demand just is not true because financialisation, capitalism, rentiers, hoarding, private landlords and Uncle Tom Cobbleigh.
New Zealand’s house prices are finally falling. Could this happen elsewhere?
Prices have dropped by up to 30% in some parts of the country – but experts say obstacles to home ownership remain
But, but:
Urban planning regulations had stymied housing development, public housing was being sold off and the population was rapidly growing, putting pressure on the limited housing supply.
So, they relaxed the planning regulations:
Building a standard single-story house in New Zealand comes with a lot of paperwork, but trying to build a multi-storey or multi-dwelling development could tie someone up in regulatory battles for months or years, at great expense.
If an area is zoned as a single-family area, the standard residence is a single house with a garden. Anyone wanting to build multiple dwellings, or anything other than a standard house, requires consent from the local council. Councils can reject the application for a whole number of reasons, including, for example, an unhappy neighbour about to lose some sunlight.
The law will scrap some of those restrictions, forcing councils to allow up to three three-storey houses on most sites in the country’s major cities, without requiring consent. Building approvals will still be required.
So, relax planning constraints and house prices come down. Isn’t that an interesting lesson? Supply, demand, prices, those things do work assuming that no idiot has passed a law demanding that they cannot.
We’ve heard it said that British house prices are a bit high at present. Even, that it might be a good idea if they were a bit lower? So, that’s the Town and Country Planning Act 1947 and successors to be blown up then. Proper blown up - kablooie. At which point we will all be able to luxuriate in those sunlit uplands of a functioning market.
What joy!
So, who is going to actually do this rather than just whinge about financialisation, capitalism, rentiers, hoarding, private landlords and Uncle Tom Cobbleigh?
Tim Worstall