So there’s a ton of countries that I’ve heard have had truly unaffordable housing for decades, like:
- The UK
- Ireland
- The Netherlands
And I’ve heard of a ton of countries where the cost of houses was until recently quite affordable where it’s also started getting worse:
- Germany
- Poland
- Czechia
- Hungary
- The US
- Australia
- Canada
- And I’m sure plenty others
- It seems to be a pan-Western bloc thing. Is the cause in all these countries the same?
- We’ve heard of success stories in cities like Vienna where much of the housing stock is municipally owned – but those cities have had it that way for decades. Would their system alleviate the current crisis if established in the aforementioned countries?
- What specific policies should I be demanding of our politicians to make housing affordable again? Is there any silver bullet? Has any country demonstrably managed to reverse this crisis yet?
Austria has, with widespread high quality public housing.
There are some waitlists and whatnot still, but arguably the bigger impact is that the increased housing supply has kept private rents very affordable too.
the increased housing supply has kept private rents very affordable too.
This is very good.
Do you know if Austria had an Ireland-style house price problem before they did this (ie. would it halt the crisis in Ireland now), or is it more that it just prevented the crisis we see in surrounding countries from happening in Austria in the first place?
They’ve been building big public housing since the 1920s. I live next to a lot of it and it’s quite high quality and really pleasant.
Lots of cities/countries has massive public housing (the UK being a great example post WW2) but Vienna is more of an exception in that they didn’t follow the trend in the 70s-90s of privatization and stopping investment (although it did slow down at one point).
They were the same way about their tram system, where they kept it rather than ripping it out like most places. Now everyone else wishes they so had a tram network or is trying to rebuild one.
That being said, rents are rising here too, but they are much more reasonable to begin with. I was living in London previously, and now we spend about 30-40% less for a place over twice the size and in a nicer location. Plus finding a place was muuuuuch easier, since it’s noticeably less competitive.
Just adding to this, some history if anyone is curious: https://en.wikipedia.org/wiki/Red_Vienna
This is genuinely cool. I love that they managed to do it within the framework of democracy too.
“before they did this” for Vienna is around WW1, which was a very different time :/
I am not very familiar with housing crises in other countries. I have lived in Vienna my whole life and now live in an apartment I own. This was possible to afford for me (a single man then in his mid-20s working as a software engineer) with a bank loan and some financial support from my family; I am not sure if it would still be possible nowadays.
What specific policies should I be demanding of our politicians to make housing affordable again?
The answer is Georgism combined with no zoning, but people aren’t ready to hear about that yet.
By Georgism I mean a very high tax (80+%) on the unimproved value of land. It prevents land speculation and returns the value of the land to the public. Houses would be incredibly cheap, because you couldn’t make money by merely owning land. The only reason to own a house would be to live in it, or to provide a true service for people who would actually prefer to rent.
This guy sees the cat
Would the ruling class want this problem solved if it’s the only commodity that can’t be produced?
China has essentially zero homeless iirc. Most people own their homes
https://www.researchgate.net/publication/340706113_Homelessness_and_the_Universal_Family_in_Chin
China has a roughly 20% migrant worker population living in notably unsanitary conditions who do not own their homes. This is a direct result of their economic policy.
They have a massive homeless population. It just looks different than in other parts of the world.
I will take your word for it for now but will definitely be doing sone research on this. I should know more about china than I do right now
This is why I linked a published academic paper on the matter. You don’t need to take my word for it.
I’ll be reading it when I am not drunk anymore, should have mentioned.
Enjoy ;-)
That depends on if you consider the migrant workers living in encampments as homeless or not
I have no idea if China has those but I can tell you that America does. I’d still rather not have humans suffering on every street corner.
Right, instead it’s better to shove them into camps on the city limits, where the well-off population doesn’t have to watch the other 20% of their total population live in utter poverty and suffer.
Thinking of China’s answer to the problem of poverty and homelessness as a solution is an insult to human rights.
So do most people here in Czechia. We have had capitalism for 35 years and for the first 30 house prices were stable and affordable (with no large municipal sector). Something has happened within the last 5 years and I’d like to know if it’s the same cause as in the other countries and how it can be reversed.
Such is the path of decommunization. Most post-soviet countries have or will experience something similar as capitalists take the housing for profit.
I definitely do fear something like that happening. Still, how would you explain the 30 years under capitalism when it was working fine? Why didn’t the capitalists swoop in in year 1 (or 15)?
I’ve always read that Japan seems to always be ahead of this issue due to its laws.
Home prices in (many) metro areas are riding steadily. Edit: some cities where the primary industry for the area is declining, this trend is going the other way
In many rural areas home prices have fallen dramatically due to a combination of migration to cities and overall declining population.
If this is a comment about homeless people, there are still plenty of homeless people all over Japan.
It’s mostly supply and demand. In Tokyo and Osaka / satellite cities, prices are going up, everywhere else they are dirt cheap.
However, in urban areas prices still aren’t as crazy unaffordable as you may think, because Japan has a very narrow wage gap (everyone in Japan thinks they are middle class, and their not wrong compared to other countries).
Another thing that makes Japan different to other housing markets, and is affected by the laws, is earthquake concerns. What other countries would call ‘established’ dwellings, they call ‘second hand’. Laws are updated every ten years or so that mean newer dwellings are much safer than older ones. Knockdown/rebuild is so common that there is competitive prices, as there’s plenty of builders to choose from. The builders are also very efficient, and apart from safety law, regulations are low (you can build whatever you like, so long as it’s robust), so labour costs are much lower compared to other countries.
If you go on Suumo.jp you’ll find plenty of very affordable houses, even in good areas/good rail links, but it’s because they don’t expect anyone will live in the house as-is - the buyer will most likely “reform” it (massive rennovation) or replace.
The state of the Japanese housing market is due mostly to cultural/economic/low immigration. If you want a policy solution other high-income countries can use to solve housing issues, the state-capitalism solution of the Singapore HDB is the best model I’ve come across. Second would probably be Vienna’s focus on social housing.
Thank you kind stranger, that was a nice and interesting review!
What specific policies should I be demanding of our politicians to make housing affordable again?
- Ban corporate ownership and excessive individual ownership (ex: > 10) of homes.
- Remove most barriers to building lots of new and higher density housing (ex: four-story multi-unit buildings) except legitimate safety and ecological concerns.
Don’t (really) let the owners set a price, have the (min and max) price set based on objective factors such as square metres of floor and the amount of schools, shops etc. nearby, as set by the government instead of by the highest bidder.
In my own Portugal, which is a very turistic country and also towards the bottom of the GDP-per-capita scale in the EU, things that would likely work very well would also be:
- Crack down on AirBnB
- Forbid ownership for non-residents.
Portugal currently has a massive house inflation problem (extra massive, because of how low average incomes are here) and a lot of it has to do with residential housing being removed from the housing market and turned into short term turist lets (for example, over 10% of housing in Lisbon has been turned into AirBnB lets) and foreign investors (not just big companies but also individuals, such as well off pensioneers from places like France) pulling prices up by being far less price sensitive than the locals as they’re buying residential housing as investments having far more money available than the average Portuguese.
Having lived in both Britain and Portugal during housing bubbles, what I’ve observed was that the politicians themselves purposefully inflate those bubbles, partly because they themselves are part of the upper middle class or even above (especially in the UK) who can afford to and have Realestate “investments” and hence stand to gain personally (as do their mates) from Realestate prices going up and partly because the way Official GDP (which is supposedly the Real GDP, which has Inflation effects removed) is calculated nowadays means that house price inflation appears as GDP “growth” since the effects of house price increases come in via the “inputted rent” mechanism but the Inflation Indexes used to create that GDP do not include house price inflation, so by sacrificing the lives of many if not most people in the country (especially the young, for example the average age for them to leave their parent’s home in Portugal is now above 34 years old and at this point half of all University graduates leave the country as soon as they graduate) they both enrich themselves and can harp in the news all about how they made the GDP go up.
All this has knock on effects on the rest of the Economy, from the braindrain as highly educated young adults leave and the even faster population aging as people can’t afford to have kids, to shops closing because most people have less money left over after paying rent or mortgage so spend less, plus the commercial realestate market is also in a bubble so shops too suffer from higher rents. However all this is slow to fully manifest itself plus those who bought their houses before when they were cheaper don’t feel directly like the rest, and they generally don’t really mentally link the more visible effects (such as more and more empty storefronts) to realestate inflation, much less do more complex analysis of predictable effects, such as how the braindrain and fall in birthrates will impact their pensions in a decade or two.
I see, yes I definitely agree that AirBnB is part of the problem (it’s happening too here in Prague), although I think it can’t be the main cause because the price rise is also being felt in other parts of the country where there are practically no tourists…
Whilst I would be wary of saying AirBnB is the main cause (more likely it’s a big one but not the only one), keep in mind that when realestate prices go up in major cities, that pushes out people who go to cheaper places, pushing prices up in those places which in turn might push some out from those places and into even cheaper places.
So housing bubbles centered in main cities do naturally spread out from there to places were the original causes of the bubble are not present.
That is certainly a good point
Crack down on AirBnB Forbid ownership for non-residents.
Ah, yes, I forgot to mention AirBnB! Those are both good calls.
The AirBnb issue is a little complicated because I’ve seen some good arguments that it can help people afford to keep their homes. But I think that could easily be addressed by a single, simple rule: you are only allowed to rent your primary residence as determined by tax records.
that it can help people afford to keep their homes
This is actually a good argument but I believe it’s only valid when people sub-let empty rooms, and don’t buy whole new houses to rent out as is now more commonly the case.
In addition to only renting out single rooms, I also thought of the scenario where someone goes to visit a relative and rents their whole apartment while they’re away, perhaps when there is some major event in their town that causes all hotels to be sold out. Both of those scenarios would be addressed by the rule I proposed to only allow renting out the primary residence on AirBnB.
Agreed
only allow renting out the primary residence on AirBnB.
Yes this sounds like a good (and importantly very simple) rule
I think I had heard of the idea before, so I didn’t come up with it. I just did a quick search and one of the first results says LA does this. There are probably other cities too…
https://www.steadily.com/blog/airbnb-short-term-rental-laws-regulations-los-angeles
Primary Residence: Hosts can only list their primary residence—the home where they live for at least six months of the year—as a short-term rental. Registration: A mandatory registration process with the city includes obtaining a Home-sharing permit and paying an annual $89 fee. Hosts must renew this permit and provide evidence of continuous compliance. Annual Cap: Short-term rentals are subject to a 120-day annual cap.
Actually, this is impressive. LA seems to have it’s shit together on this issue. Do you know if house prices are still a problem there?
Free
Social
Housing
Stop making it more complicated
Oh, I agree if you’re talking about addressing homelessness. That makes sense. If you’re advocating free social housing for every single person in the country, I’m not sure how that could be done or if it’s ever been done anywhere ever? I would be curious to hear about possible solutions though.
Massachusetts has a regional transit system, and just used that to mandate transit oriented development for all towns and cities served. It requires they zone higher density housing “as of right” within half a mile of transit. I have high hopes for that, but it will take decades and we’re starting at such a high cost of living.
However we also have the problem of a stagnant population and very little room for new development. It’s infill and replacement housing so will be even slower
I think money should be invested into investigating ways to retrofit the current urban sprawl neigborhoods to make them higher density.
Good to hear about any moves in the right direction anywhere.
Ban corporate ownership and excessive individual ownership (ex: > 10) of homes.
This is also what my knee jerk reaction would be. Do you know if it’s actually been done in any country, and whether it worked?
I don’t know, and based on a quick search, it doesn’t appear that it’s been done. California is currently working on a law to limit corporate ownership to 1,000 homes, lol.
Lol. At least a step in the right direction I guess. They should make it decrease by 100 each year
Japan has.
Japan is an outlier for numerous reasons, the biggest of which is that housing value there decreases over time (without going into the causes, the result is a feedback loop where housing isn’t built to last because it’s a poor long-term investment, so it depreciates like other semi-short-lived products, such as cars). This isn’t something the government planned, it came about naturally. So I wouldn’t say they’ve “solved” housing so much as their situation has made it a non-issue.
Japan also has longtime low population growth due to a mixture of nationalist anti-immigration and just generally low birthrates. So with the passage of time, less and less older homes will be in use.
This is both false and true. Japan has a few things happening that are keeping rates lower, but the primary thing keeping costs low in Japan is the fact that the units are tiny. I’m not talking a little on the small side, I’m talking 200 square feet or less per person in a family home. No yards either.
If you compare Japan to the dwelling sizes of other nations, it’s just as bad or worse per square foot.
The end goal for solving housing should not be to make the rooms as small as possible. Especially in countries where land space isn’t the limiting factor.
The housing I remember in Japan was the coffin box. A little space long enough for you to lie down in, with a small cubby for items. I think it was about 30 sq. ft. and maybe 90 cu. ft.
By making the rooms smaller you’re just kicking the can down the road. Eventually the price inflation will catch up and even those shoeboxes will cost a fortune.
I mean there are a ton of efficiencies to be gained with using communal resources.
Why can’t a bunch of people share a park rather than needing their own back yard?
Not saying it shouldn’t be an option, but the American obsession with detached housing at the cost of higher density housing is a major contributor to insane housing costs.
The main thing is that it greatly limits creative types and entrepreneurship at a grass roots level. I would have a lot more shop tools and mess around a whole lot more if I just had more space than this tiny house I live in, but the location here I’d awesome. Without a back yard and some safe space I can’t do metal casting. I don’t have room in a 1 car garage for a smallish mill and lathe. I would absolutely use old aluminum wheels and heads from the auto recyclers to cast and machine my own stuff if I had the space. There is a decent chance that that kind of crafting leads to starting a new business.
As someone that has started a business twice. Never start a business cold. You do something for awhile on the side and once you are turning down work regularly, only then do you look into quitting a day job to do your own thing. Eliminating space eliminates most of people’s opportunities to innovate. Community spaces make cleanup and large projects a management nightmare and take much longer because you must clean up everything not to mention transportation and logistics.
Not everyone is creative or capable, and that is fine except that, if space is made into a luxury, escaping poverty with intelligence and persistence becomes considerably more impossible than it already is.
Sure, but apartments at 1000 square feet shouldn’t be unaffordable in north American cities, but they are.
Crises are going to continue being crises as long as the wealth inequality of people worldwide continues increasing.
Think of it like this. There’s a finite amount of money in the world. Right?
The wealth of billionaires has doubled in the last few years. That money came from somewhere. Still with me?
Ok, so… if the wealth of the wealthiest people has doubled, that amount of money they gained was previously held by the less wealthy, but it has now been consolidated into the wealthier people’s bank accounts.
So. How do we solve the housing crisis (or any crisis)? Step 1 has to be to undo the consolidation of wealth. Solving crises without addressing the consolidation of wealth is a pipe dream.
Feel free to hunt for legal mechanisms for achieving that. But I think you’ll find there are institutions and propaganda preventing those mechanisms from being effective.
I was impressed with Singapore when i was there a while back: https://en.wikipedia.org/wiki/Housing_and_Development_Board
Yea, the technique of the government simply owning all the land and doing all the development does work. It just can’t really be applied to any western country without a massive revolt when they confiscate all the land from private owners. The government could never afford to pay for all of it, so it would have to be seized without payment.
You don’t need to seize it, just tax it enough that land ownership is no longer profitable
I’ve advocated for LVT in the last couple of weeks even.
Downtown Los Angeles has a high rise that was abandoned by the owner/builder. It’s covered in graffiti. They could start there.
Every time I see it i die a little inside
Also, hasn’t it been demonstrated that the government directly deciding the allocation of resources leads to massively clumsy solutions? I’m surprised it hasn’t impeded Singapore’s renowned efficiency.
Some governments can do it for some industries.
Public healthcare in most developed countries is generally pretty decent, though obviously not without flaws the allocation is clearly better for society than the US private healthcare system.
For allocation of food, it’s pretty shit. Too many people want too many different things in that scenario and it has never really worked in practice.
Fascinating. I didn’t expect a country known for neoliberalism like Singapore to have fully nationalised land ownership (haven’t read the whole wiki article admittedly)
Vienna has 50% public housing and as a result basically no homeless population.
How Britain (Almost) Solved the Housing Crisis https://www.youtube.com/watch?v=jZpLiJdIGbs so we didn’t and then we did and then we didn’t
Ooh I watched this when it was released. So essentially vast municipal ownership. Definitely something I can get behind but it takes decades.
Look at places in the U.S. who have built a lot more housing – rents and housing prices have gone down.
- Relax/change zoning requirements
- Give subsidies to developers for affordable housing
There’s a bunch of available housing in my area, but it’s just super expensive. I guess building more might work. My only concern is I only see larger 3+ BR housing or shared housing behind built. The days is affordable 1 to 2 bedroom houses are over. If you want something smaller, you are stuck with condo and high HOAs. Personally, I think they should bring back trailer parks and force ownership to be local.
Trailer parks have the same problem as suburbs of being super low density. They should stack the trailers on top of each other to save space.
Edit: ok I guess what I’m suggesting are those builders’ prefabs
Not everyone wants to live in a trailer park.
Smaller housing would need to be subsidized because it costs a lot to build relative to what it could be sold for.
China also has a massive homelessness problem, so it’s definitely not a “pan-Western bloc” thing. This is despite China executing every landlord and building enough homes, turns out people get assigned to a home in a region where they don’t actually live or work…
Vienna is not as good a situation as it may look. Their public housing stock is only great if you can’t get into it. There are waitlists years long, and you have to live in the city already to be eligible to get on the waitlist. Private housing is still expensive.
