"WHAT IS THE HOUSING CRISIS?"
"One of the discussed topics within developed countries is the spike in housing prices which very much exceeds the average salary of the individual within that country. In fact it could be said that even those who earn very high salaries aren't even able to afford it. For example in london, there are several houses and several flats that cost around $1 million despite the median salary being around $40000. Meaning various people resort to renting rather than purchasing houses. But what is the reason of this unaffordable prices?"
"Prices tend to rise if there is either lack of supply of housing or there is very high demand of housing. It could be said that there is low of supply of housing especially if underutilised lands that are not being used by construction companies. It could be said that with the rise of labour costs especially when the government instructs businesses to give them a certain amount of non-monetary benefits and the government imposes lots of red-tape which impedes the construction company to continue their work as they deal with certain amounts of administration costs. However does this really explain the high prices of housing? Whilst cost of production is high and it does drive up prices the proportion of it being part of the price represents a small proportion even if one were to use the margin based pricing. Yet so many people suggest building more houses in order to reduce prices in an orderly manner within the market without the fear of government intervention."
"Contrary, to what some people think, the prices are driven by demand. Now some might be pondering if it was driven more by demand than a lack of supply why is it that prices are still so high that its even unaffordable to many people with six-figures?"
"Many people seem to not ponder into is the role of interest rates within the housing market especially when used to purchase expensive assets such as housing. When house sellers figured out that the average person were using loans in buying houses and that the average person planned to pay a large monthly amount, the house-seller realised with the new credit access that the average consumer household has, they were able to spike the housing price much more further over the roof. But it's not only that, many people who have a house tend to value it a lot meaning they are less willing budge when it comes to lowering their price as they see the house as part of their wealth. Another key aspect of the spike of demand of certain houses is the location which is why you see houses that are objectivity of higher quality in rural areas compared to houses in urban areas which is of lower quality. For example houses or even flats cost more than $500000, simply when houses are in the capital cities. And sometimes spikes of rent might happen near train stations as well as landlords understand the value of access to labour mobility."
"One of the discussed topics within developed countries is the spike in housing prices which very much exceeds the average salary of the individual within that country. In fact it could be said that even those who earn very high salaries aren't even able to afford it. For example in london, there are several houses and several flats that cost around $1 million despite the median salary being around $40000. Meaning various people resort to renting rather than purchasing houses. But what is the reason of this unaffordable prices?"
"Prices tend to rise if there is either lack of supply of housing or there is very high demand of housing. It could be said that there is low of supply of housing especially if underutilised lands that are not being used by construction companies. It could be said that with the rise of labour costs especially when the government instructs businesses to give them a certain amount of non-monetary benefits and the government imposes lots of red-tape which impedes the construction company to continue their work as they deal with certain amounts of administration costs. However does this really explain the high prices of housing? Whilst cost of production is high and it does drive up prices the proportion of it being part of the price represents a small proportion even if one were to use the margin based pricing. Yet so many people suggest building more houses in order to reduce prices in an orderly manner within the market without the fear of government intervention."
"Contrary, to what some people think, the prices are driven by demand. Now some might be pondering if it was driven more by demand than a lack of supply why is it that prices are still so high that its even unaffordable to many people with six-figures?"
"Many people seem to not ponder into is the role of interest rates within the housing market especially when used to purchase expensive assets such as housing. When house sellers figured out that the average person were using loans in buying houses and that the average person planned to pay a large monthly amount, the house-seller realised with the new credit access that the average consumer household has, they were able to spike the housing price much more further over the roof. But it's not only that, many people who have a house tend to value it a lot meaning they are less willing budge when it comes to lowering their price as they see the house as part of their wealth. Another key aspect of the spike of demand of certain houses is the location which is why you see houses that are objectivity of higher quality in rural areas compared to houses in urban areas which is of lower quality. For example houses or even flats cost more than $500000, simply when houses are in the capital cities. And sometimes spikes of rent might happen near train stations as well as landlords understand the value of access to labour mobility."