Debate Magazine

Housing Crisis Paradox

Posted on the 31 January 2017 by Markwadsworth @Mark_Wadsworth

We are told that high housing costs are due to a lack of supply. Therefore we need to build more homes to make them affordable. But building and maintaining housing expends labor and capital, which are a cost. 

How can increasing the cost of something make it more affordable?

Of course people need somewhere to live and the cost of housing is outweighed by the benefit of having shelter. But as the UK has roughly a million more dwellings than households, everyone has a roof over their heads, so it doesn't  appear we have an actual "shortage".

This paradox is based on a misunderstanding of costs. Location isn't a produced factor, so what makes up the majority of rents and selling prices isn't a cost, but a transfer payment. It is this payment which causes excessive individual, inter-generational and regional inequality, from which affordability issues for large parts of society is but one of the symptoms.

What puzzles me is that the subject of economics is really about costs and how to reduce them ie resource allocation and productivity.

Why is is then not a single economist recommends tackling this problematic transfer payment at source with a 100% LVT as the best way of addressing the "Housing Crisis"? Which would not only solve affordability issues completely and permanently, but would reduce costs by allowing the market to rationalise our existing housing stock.

Instead they want to tackle it indirectly by building more houses in order to reduce selling prices. Not only will this be far less effective in the goal of reducing the transfer payment, it will add billions of pounds of unnecessary costs to our economy.


You Might Also Like :

Back to Featured Articles on Logo Paperblog

These articles might interest you :

  • Cottages

    Cottages

    Can you picture the scene? The cottage nestles below a mountain. Honeysuckle climbs the front wall and the name of the cottage mirrors the flower. Read more

    The 19 September 2018 by   Ashleylister
    BOOKS, CREATIVITY, CULTURE, SELF EXPRESSION
  • Happy Anniversary! Seven Years of Yoga for Healthy Aging

    Happy Anniversary! Seven Years Yoga Healthy Aging

    by NinaBy Wayne Thiebaud*Today’s our seventh anniversary! And when this time of year comes around, I can’t help but reflect on everything that happened here... Read more

    The 19 September 2018 by   Ninazolotow
    FITNESS, HEALTH, HEALTHY LIVING
  • Kotte Kadubu: a Symbol of Tradition Wrapped in Moulds of Faith

    Kotte Kadubu: Symbol Tradition Wrapped Moulds Faith

    Having celebrated Ganesh Chathurthi last week with all the religious fervour, this post is a look at one of the traditions followed each year on the day of the... Read more

    The 19 September 2018 by   Rashmi Gopal Rao
    DESTINATIONS, TRAVEL
  • Kotte Kadubu: a Symbol of Tradition Wrapped in Moulds of Faith

    Kotte Kadubu: Symbol Tradition Wrapped Moulds Faith

    Having celebrated Ganesh Chathurthi last week with all the religious fervour, this post is a look at one of the traditions followed each year on the day of the... Read more

    The 19 September 2018 by   Rashmi Gopal Rao
    TRAVEL
  • Mintd Box + Oskia London

    Mintd Oskia London

    What happens when a luxury beauty box joins forces with a very famous skincare brand? This month's box is what! This September, Mintd Box have collaborated... Read more

    The 19 September 2018 by   Kellilash
    HAIR & BEAUTY, LIFESTYLE
  • North American T-6D Texan/Harvard

    North American T-6D Texan/Harvard

    @ Madras, OR August 2015 First flown in 1935, more than 15,000 of these iconic warbirds were produced and served in air forces around the world as late as 1995. Read more

    The 19 September 2018 by   Htam
    PHOTOGRAPHY, SOCIETY
  • The 2-week Keto Challenge: “I’m Amazed at How Satisfied I Feel”

    2-week Keto Challenge: “I’m Amazed Satisfied Feel”

    Over people have signed up for our free two-week keto low-carb challenge. You'll get free guidance, meal plans, recipes, shopping lists and troubleshooting... Read more

    The 19 September 2018 by   Dietdoctor
    DIET & WEIGHT, HEALTH, HEALTHY LIVING, MEDICINE

Magazine