1
$\begingroup$

In the Netherlands we have a shortage of affordable housing. Especially in urban areas, especially housing in the price ranges affordable for young people and middle and low incomes. This is pretty much a constant, of course now that the economy is doing well and the house prices are rising again, after the 2008 crises, it is even more true. A couple of years ago - at a period in time when affordable housing was a scarce but real estate prices were not going through the roof - our then Minister for Housing was on television in Singapore asking investors to come buy ('invest in') Dutch real estate.

Here is a clip in Dutch, shown in a late-night show: "Starters op de woningmarkt - Zondag met Lubach (S09)"

Why? Could there ever be any benefit for citizens when investors buy existing real estate? They are not building new houses. Could there ever be any benefit in a situation where affordable housing is already scarce?

| improve this question | |
$\endgroup$
2
$\begingroup$

The owners of existing housing certainly benefit from increased demand and higher prices for their assets. The total benefit to society may be positive or negative, depending on whether current owners win more than current non-owners lose (from higher prices if they want to buy and become owners).

Higher price of housing makes new buildings more profitable, benefiting the construction industry.

The politician may favour certain groups over others, for example the construction industry is usually a large donor in election campaigns. So the politician may want real estate prices to rise even if it is on average bad for the country.

`Invest in' need not mean buying existing housing, but it could mean building new buildings and selling the apartments in them. This could increase availability and decrease the price of housing.

| improve this answer | |
$\endgroup$
  • 1
    $\begingroup$ +1 I would just add that there could also be a loss to non-owners who do not want or expect to be able to buy, if higher prices lead to higher rents. $\endgroup$ – Adam Bailey Oct 20 '18 at 10:46
  • $\begingroup$ I have accepted your answer as it seems the only answer, but i must say it is bleak. It really means that the politician in question decided to favour one group at the expense of others. And that talk of the 'problems renters face' is meaningless, since those problems are created on purpose to let home-owners and investors profit. $\endgroup$ – Ivana Nov 3 '18 at 0:59

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.