The Nanny State Orders An Inquiry Into Supply Side Economics 101

April 22, 2010 — 5 Comments


This has to be a joke, right?

The Age: Review for house market

THE federal and state governments are moving to ease the pressure on house prices by commissioning a review of factors curtailing the supply of new houses and artificially pushing up the demand for housing.

They should pay me to head the review, or my 7 year old son who clearly has a better grasp of supply and demand than either the Victorian and Australian Governments.

Problem is two fold:

-not enough land available for housing
– builders artificially restricting supply to keep prices up even when there is land (this was particularly so in WA)

Both restrict supply in a market that due to natural and artificial growth (specifically immigration) has a never ending upward trend in demand.

Land is like water in many ways: we lack in neither, but the supply of both is restricted by Government action, or inaction as the case may be.

And no Government in this country is going to change a thing, because the moment house prices start seriously coming down due to an increase in supply, every man and his dog with a mortgage or who already owns a house is going to be beyond pissed, and politicians don’t risk that many votes.