Two facts should slap you in the face when you see the supposed puzzle of housing shortages alongside slowing development.
First, like you say, that developers have no incentive to eat their own profit.
Second, that the problem is fundamentally one of income distribution, not housing market policy. If people (e.g. the homeless) need homes, and developers don't want to build them, it can only be because those people lack the purchasing power to draw those resources into use.
Nice clean example: NZ. The lowest disposable incomes here (for a single beneficiary) are $16,000 per annum. Housing affordability at the 30% benchmark would mean these people spend $5,000 on rent. That amount could service a $100,000 mortgage for the landlord. Which is about half what is needed to construct the cheapest unit imaginable, assuming free land. Even a full-time minimum wage earner has only $32,000 disposable, barely enough at the 30% benchmark to finance construction of the cheapest home.
If people aren't earning enough to finance the bricks and mortar (let alone land acquisition) for the cheapest housing possible then no housing market policy settings can fix that. If the problem can't be fixed in the housing market, but can be fixed by redistribution, it's an inequality problem, not a housing problem.
I suppose it makes for sexier careers and better headlines to pretend it's all about housing.
And it's certainly a nice bait-and-switch to blame the results of the neoliberal revolution on the neoliberal revolution not going far enough.
I think the main way in which planning decision-making, which itself is affected by the 'Nimby' syndrome, affects the economics and viability of housing supply, and potentially the quantum of housing supplied, is by increasing costs and risks associated with projects.
For example, if you have fewer parcels of land that are planned for a particle type of housing that is in demand then developer's may end up paying more for those parcels due to greater competition in the market, i.e. ultimately developers need land to have projects and a business. Project delays due to planning decision-making also increase costs, e.g. holding costs for the land and costs for development consultants needed to navigate through the planning system.
Infrastructure costs are also big factor in both the viability of individual projects and in the real availability of land for development, i.e. high infrastructure headworks costs constrain the real availability of land for development and hence the level of competition for the available land, increasing the costs of acquisition.
Two facts should slap you in the face when you see the supposed puzzle of housing shortages alongside slowing development.
First, like you say, that developers have no incentive to eat their own profit.
Second, that the problem is fundamentally one of income distribution, not housing market policy. If people (e.g. the homeless) need homes, and developers don't want to build them, it can only be because those people lack the purchasing power to draw those resources into use.
Nice clean example: NZ. The lowest disposable incomes here (for a single beneficiary) are $16,000 per annum. Housing affordability at the 30% benchmark would mean these people spend $5,000 on rent. That amount could service a $100,000 mortgage for the landlord. Which is about half what is needed to construct the cheapest unit imaginable, assuming free land. Even a full-time minimum wage earner has only $32,000 disposable, barely enough at the 30% benchmark to finance construction of the cheapest home.
If people aren't earning enough to finance the bricks and mortar (let alone land acquisition) for the cheapest housing possible then no housing market policy settings can fix that. If the problem can't be fixed in the housing market, but can be fixed by redistribution, it's an inequality problem, not a housing problem.
I suppose it makes for sexier careers and better headlines to pretend it's all about housing.
And it's certainly a nice bait-and-switch to blame the results of the neoliberal revolution on the neoliberal revolution not going far enough.
I think the main way in which planning decision-making, which itself is affected by the 'Nimby' syndrome, affects the economics and viability of housing supply, and potentially the quantum of housing supplied, is by increasing costs and risks associated with projects.
For example, if you have fewer parcels of land that are planned for a particle type of housing that is in demand then developer's may end up paying more for those parcels due to greater competition in the market, i.e. ultimately developers need land to have projects and a business. Project delays due to planning decision-making also increase costs, e.g. holding costs for the land and costs for development consultants needed to navigate through the planning system.
Infrastructure costs are also big factor in both the viability of individual projects and in the real availability of land for development, i.e. high infrastructure headworks costs constrain the real availability of land for development and hence the level of competition for the available land, increasing the costs of acquisition.