Rents increasing: Let the Good Times Roll

[Ben Kenobi]

The trouble is Spiffor, that the demand for public housing would always exceed supply. It's like health care, the more you fund, the more needs to be put there.

As for housing demand if it is true that 20% of the people generates 80% of the demand for housing, then you could house a significant portion of the overall people into public housing without having any effect on the overall housing demand.

The people who would get the public housing aren't exactly the folks pushing up the demand, since if you can't afford what they are selling you have been pushed out of the market.l

[DaShi]

In many of the major cities in China, they are building apartment complexes like crazy to try to lower the rates. It's not working at all.

[Spiffor]

Originally posted by Ben Kenobi
The people who would get the public housing aren't exactly the folks pushing up the demand, since if you can't afford what they are selling you have been pushed out of the market.l

You forget one thing. Housing is an essential need for human life. "Affording" housing doesn't mean the same thing as "affording" an MP3 player.
If you have money trouble, you can easily ignore the call to own an MP3 player. It's not so with housing. With food, housing is something for which you'll be willing to squeeze your revenue to the last penny.

It's not unusual to see people spending 2/3 of their income on rent. They pretty much spend nothing but rent and food. You can even see people getting in debt to remain in a home, rather than living on the streets.

Heck, I'd even go so far to say that you yourself are a prime example. Do you live on the streets? And yet, do you have trouble making ends meet, rent-wise?
See, even you, for all the problems you might meet money-wise, are a pressure on demand, that harms you (because your rent is way over your resources), and to the middle class (because the owners can get cocky with prices)

[Spiffor]

Originally posted by DaShi
In many of the major cities in China, they are building apartment complexes like crazy to try to lower the rates. It's not working at all.

Isn't China currently experiencing a massive population boom in its cities (because of internal migration)?

[Kontiki]

Originally posted by Spiffor

They're also a sign that the society relies too much on market mechanisms to satisfy the needs.

There are several significant social phenomena that bring an increase in housing prices pretty much everywhere:

- A consequence of being in a urban society is that there is an immense premium for land close to city centres. Cities will get more pressure from a rise in demographics too, because few city dwellers get rid of their city-house, and many rurals (both from within and without the country) want to live there.

...

-- We are beginning to reach the limits of city-range. You can't go much further than a two-hours commute to work, and car-traffic ain't much faster now than 40 years ago. As a result, going further from the city in order to find bargain land prices isn't necessarily an obvious option at it used to be. Especially in cities where suburbian sprawl is already spread very far.

A major point that you ignore is that work needn't be concentrated in city centres, and thus there's alot more room for city expansion than you give credit to.

[Fake Boris]

Originally posted by loinburger
Milk was $2.50 a gallon this week.

Dude that's cheap!

[Ben Kenobi]

Heck, I'd even go so far to say that you yourself are a prime example. Do you live on the streets? And yet, do you have trouble making ends meet, rent-wise?

True, however the market that I affect is the rental market. You are right that we have a little bit of an effect on housing prices since we still take up space, however I think the biggest effect we have is on the homeowners themselves.

A homeowner isn't going to purchase a house with renter in mind, although for many people here in this city that is the only way in which they can afford their current mortgage. So we act as a brake on some housing sales that would otherwise happen due to circumstances.

Supposing I was in social housing, I don't think that really changes the demand, I am taking a spot that would otherwise be available to someone else.

[Spiffor]

Originally posted by Ben Kenobi
True, however the market that I affect is the rental market.

Read the title of this thread again

By "housing prices", I mean both forms of prices (rental and ownership), and both are related to each other, because there's no unlimited supply of habitable surface.
Said supply also tends to be lower when onyl market mechanisms are at work, because they don't encourage to build vertical housing with cheap rent.

[Ben Kenobi]

Ok I thought this thread had drifted into a discussion of housing prices excluding rent.

As for incentives building highrises, it really depends on the demand. If demand for rental properties are high enough, then it will make financial sense to build.

[DaShi]

Originally posted by Spiffor

Isn't China currently experiencing a massive population boom in its cities (because of internal migration)?

Yes, but they couldn't afford to live in these places as it is. Mostly they end up in cheap tenements that are little more than single room shacks. Or they live where they work, in the case of construction workers. The problem is that once a new apartment complex opens up, most of the apartments are bought by a few people who then rent them out at an exorbitant price.

[pchang]

Who is renting then?

You can't rent out at an exorbitant price unless someone can afford it. Therefore,
1) There must still be plenty of high income renters our there
or
2) The landlords can afford to keep many apartments empty

[Dinner]

Originally posted by DaShi
In many of the major cities in China, they are building apartment complexes like crazy to try to lower the rates. It's not working at all.

That's because 80% of China's population is in the rural areas and they all want to come to the coastal cities to make more money. It's still supply and demand and the supply just isn't keeping pace with demand.

[Dinner]

Originally posted by DaShi
Yes, but they couldn't afford to live in these places as it is. Mostly they end up in cheap tenements that are little more than single room shacks. Or they live where they work, in the case of construction workers. The problem is that once a new apartment complex opens up, most of the apartments are bought by a few people who then rent them out at an exorbitant price.

If the government stepped in to help finance more high rises then eventually supply would exceed demand and the speculators will be left upside down with their mortgages.

[MRT144]

but that assumes that people are willing to move into high rises as a consumer decision.

[Dinner]

This is China. What choice do they have? There is no where else to go but up.