There’s talk of bidding wars and price hikes and building material shortages all over the place. I’ve read a bunch of repting on it, but curious what folks here think
What’s causing the housing crunch? What causes it in your region versus other people’s regions?
From what I understand, the housing market is different in the US than it is down here in Australia, but I believe the housing market suffers from similar problems in both countries. The main difference is that US houses prices took a brief nosedive for a few years following the subprime lending crisis of 2007-08, whereas Australia's houses prices remained stable.
The problem plaguing housing in Australia, and certainly many other countries, is that some people are buying houses because they need somewhere to live, and other people are buying houses because they want to collect rent and profit from increases in the value of those properties.
These investors create problems for wannabe homeowners in a number of ways: firstly, they compete for housing stock, which pushes up the prices of houses. This makes modest houses entirely unaffordable in many suburbs, even for dual-income families. Secondly, investors do not put their houses up for sale unless they expect to make a profit. So instead of a housing market driven by homeowners who regularly buying and sell as their needs change, we have a market where many of the property owners withhold keep their properties off of the market until prices increases enough to bring them an satisfactory profit. This artificial scarcity both reduces the number of houses that homeowners can buy and increases the prices that they must pay for the limited stock that's available.
Some analysts, such as the Grattan Institute, have suggested that the housing market suffers from a lack of supply, which could be alleviated by building more urban sprawl or increasing housing density. This makes sense - more supply should bring prices down - but it ignores the fact that capitalists are deliberately restricting supply in existing residential areas in order to increase their profits. In Australia the government also gives generous tax concessions to investors (negative gearing, discounts on capital gains tax), which gives them further incentives to buy and hold onto housing stock.
This crisis, or crunch, or whatever you want to call it, has been in the making for decades, long before the pandemic. And things can only continue one way: investors will own an increasing share of the housing stock, putting home ownership out of reach for most people in the suburbs. A few people are going to get really fucking rich at everyone else's expense.
As far as I'm concerned, these investors are nothing more than a class of blood-sucking parasites who collect rent money and offer nothing of value in return.