Monday, August 07, 2017

The market is not providing

We have a housing crisis, caused primarily by a failure to build enough houses to cope with demand. Dogmatic economics tells us that the market will respond to this naturally by increasing supply to match demand - and the government has basicly crossed its fingers and is waiting for that to happen. Instead, the market seems to be building even fewer houses than before:

The government's forecast for new home building in Auckland in the coming years has been lowered for the second year in a row.

The National Construction Pipeline Report has sliced 2200 off the number of new home consents it expects to be issued in Auckland in the current calendar year, to 11,100.


The forecast for 2018 has been lowered by nearly 1700 to 11,900, and in 2019, by 513 to 12,800.

The 2017 estimate is now 3549 lower than the report forecast two years ago.

The pipeline report is compiled by the building industry, along with the Ministry of Business, Innovation and Employment and its findings are released each year by Building and Construction Minister Nick Smith.

And only about half the homes consented actually get built. So, they're consenting fewer homes, and only building half of what they get approved. Its a clear example of market failure, of an industry focused on providing status properties for rich wankers rather than ordinary homes for ordinary people. And the sensible solution is for the government to get involved and build what the market won't.