Comment by andy_ppp | Hacker News Reader

Comment by andy_ppp | Hacker News Reader

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The easiest solution is always capitalism, I agree, I'm fairly certain however it's harder to find somewhere to rent in London and paying more in Berlin still reaps results (having lived there as an IT contractor for 4 months from London I should know). I think these things can be solved in Berlin much more easily than most capital cities (i.e. there is substantial space to build new homes that simply doesn't exist in London or New York say).

Simply saying "be more capitalist" might work, but I'd say build more quality homes on all the scratchy pieces of land that exist round Berlin is an equally good option above firing people into the weird world of London property.

Finally the AirBnB/rentals thing is a result I'd guess of the massive number of people who hate having tourists traipsing through their buildings. My experience at least centrally was of large shared blocks of high quality flats and a lot of suspicion around strangers being granted entry to said gated communities.

London comes from capital going to it due to very low property tax rates and basically no income tax for wealthy foreign people via 'non-domiciled' resident tax law. Housing becomes a store of wealth / commodity investment vs. a thing you use like a car.

As a result a property investment bubble feeds on itself and creates the london problem.

To reverse that you make it unattractive as a store of wealth and attractive as an active investment via renting it out. And you remove supply creation limits. You would decrease the unfair demand side by taxing them like a typical UK resident.

Also zoning policy usually doesn't help at all with typical height limits.

Also the govt has shown there is a put on property as the UK is a land pyramid scheme.

They bailed out all the banks to prop it up. After this help2buy (help2sell in reality) to have the govt underwrite risk when the banks stepped out.

This isn't capitalism.

It's the perfect capitalism: private profits, public loses, and then blame it to the non-free market.

Don't forget 8 years or so of "emergency" low interest rates.

Being more capitalist is how you create the incentives that result in more quality homes being built on the scratchy pieces of land that exist around Berlin.

It doesn't, actually. In the US, there are just a few apartment consortiums which own the lion's share of the fleet of newer construction units. Anarchist capitalism encourage supply-side monopolist hegemony, not competition. Competition is undesirable for capitalists when supplying goods and services and optimally minimized, it is desirable by buyers but this is mostly irrelevant in an artificially-controlled supply market where demand is inelastic. If Hyperloop were rolled out across most continents, empty land could be "closer" to economic centers and housing supply would be effectively increased by widening the commute radius, making it more affordable.

How do you think these capitalistic monopolies enforce their monopolies?

They do it through the government by creating arbitrary regulations and barriers to entry.

We are already living in a world where the housing monopolies are enforcing their will on the population.

Getting rid of these regulations, and allowing people to build so many houses that the market price gets driven into the ground, is how we take the market back for the people.

They do it through the fact that being a monopoly or oligopoly is inherently more profitable than not being one, so if you don't play along you're basically leaving money on the floor.

When monopolies exist, that means that there is currently money being left on the table.

Someone ELSE can come it, charge less, and get all the customers to go to them instead.

This is what allowing more houses to be built would do.

For infrastructure companies, Once you have a national monopoly if any small company undercuts your prices you can cut your prices in their area only, subsidised by profit from the rest of the country, so the upstart loses money on their investment.

Thus preventing them from bootstrapping, or demonstrating profits to investors.

>Someone ELSE can come it, charge less, and get all the customers to go to them instead.

Except there are huge entry costs, and all that theoretical ROI disappears as soon as you enter the market, because the existing monopoly starts competing.

To make a profit, you need some advantage over the them, like efficiency, innovation or goodwill. If all you can do is exactly what they do but at market price, well... they can do that too.

How would that apply to the Bay Area Housing market?

If someone started building a whole bunch of housing in SOMA, do you believe that this ROI would disappear quickly, due to housing prices hitting rock bottom?

Do you really believe that would happen?

No, I was mostly arguing generally, that a monopoly can exist without it being the government's fault. But I think it's fairly clear that the housing market is indeed strongly influenced by regulation.

> allowing people to build so many houses that the market price gets driven into the ground

I live in Honolulu, Hawaii. Prices here are RIDICULOUS, but this is the last thing I want. At some point growth has to stop or we will lose what makes this place what it is.

Then the prices will keep going up and drive out the regular renters anyway. Either you expand, (up or out) or the place gets turned into a playground for the rich.

The proper solution is markets plus land value taxation with revenues going to (or at least shared with) local bodies.

The land value tax aligns the incentives right, so that the local administrations have an incentive to put the proper regulations in place.

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