Supply won’t fix housing problem
availability of cheap credit, and the tax relief available via negative gearing.
After all, we are already building more houses, but prices are, if anything, still going up. When, exactly, does the theory predict that the supply will succeed in deflating the price bubble? Right, that would be sometime in the misty forever.
Across the Tasman last week, some Australian academics and housing agencies wrote an open letter to the New South Wales government strongly criticising its reliance on the supply equals affordability theory.
As NSWuniversity professor Bill Randolph pointed out, increased supply would not necessarily lower the price of housing.
‘‘The problem is you can’t apply year 10 economic theory to a metropolitan housing market,’’
‘‘There is no silver bullet to New Zealand's longstanding housing issues.’’