The key point is that increases (declines) in demand can bring sharply rising (falling) house prices when supply is constrained. However, when land supply is not regulated, it adjusts to demand and house price volatility is reduced.
As long as commentators focus primarily on the demand side of the housing market, whilst ignoring supply-side constraints, they will never fully understand the drivers of housing bubbles and busts. The resulting incorrect diagnosis will inevitably lead to poor policy prescriptions and outcomes.
The economic forces underpinning the housing affordability crisis
12 May 2015 2 Comments
in applied price theory, economics of regulation, politics - Australia, politics - New Zealand, politics - USA, urban economics Tags: housing affordability, land supply, land use regulation, RMA, zoning
Utopia, you are standing in it! 
May 12, 2015 @ 12:23:57
I would have thought increasing medium density is the way to go. Apartments are easier to build quickly and cost less to provide the necessary public infrastructure to.
Unfortunately house owners protest against this.
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May 12, 2015 @ 12:25:22
Yes, the NIMBYS hate them.
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