Our Word, so supply and demand works for housing then, does it?

We are, repeatedly, told that Britain’s housing problems are much more complicated than it is possible to believe. Financialisation, The City, neoliberalism even, gross problems that cannot be solved by simply building more houses. We’re all even regularly told that building more houses won’t reduce house prices at all - the rich will just buy them to profit. Quite how that works - there’s no profit if there’s no income stream from doing something with the house after all - is never quite explained.

So, let us try this from the other end of the argument:

According to the 2021 census, around a quarter of all housing in Westminster, Hammersmith and Fulham, and Kensington and Chelsea is socially rented. In Camden, Lambeth and Tower Hamlets, that proportion rises to a third. And in the trendy neighbourhoods of Hackney, Islington and Southwark, an astonishing 40pc of households are social tenants.

This massive stock of housing, built on the most valuable land in the country, is permanently off the market. You cannot buy or rent any of it, no matter how hard you work, and waiting lists can stretch over decades.

Ah, waiting lists. You mean, like a queue? There’s a queue for something on offer at substantially below market pricing, is there? Well, there we are then. Supply and demand does indeed work for housing. For what do we predict about demand if prices are below market clearing ones? A queue. Thus the existence of a queue for below market price goods is proof - not proof perfect but highly indicative at least - that our standard model of supply and demand is in operation.

And if housing is subject to supply and demand and prices and that Econ 101 stuff then housing is subject to supply and demand and that….

Tim Worstall