Pardon my ignorance, but wouldn't higher property taxes further increase rents and housing prices? I would instinctively assume the increased costs would be passed on to buyers and tenants.

Normally yes but not in areas where prices are already at the maximum ceiling of what people can afford. Raising property taxes shifts net income from the property owner to the taxing authorities. This reduces net income (yield or CAP rate) from the property and drops the price accordingly as investors sell investment properties and migrate their capital to other assets. Now, there's no free lunch. You end up hurting both wealthy investors and poor/middle class mortgaged-to-the-hilt homeowners who barely squeezed into the market. As we saw in 2008, bad things happen when a large % of mortgages plunge under water.

> You end up hurting both wealthy investors and poor/middle class mortgaged-to-the-hilt homeowners who barely squeezed into the market.

You don't necessarily hurt anyone, you just lower the attractiveness of real estate as an asset class. The yield chasers will move their money into a more attractive asset class, the value investors who buy real estate for price stability or tax reasons would stick around with lower yields.

>You end up hurting both wealthy investors and poor/middle class mortgaged-to-the-hilt homeowners

Yet you'd be helping everybody else who didn't take on irresponsibly large debts.

Pardon my ignorance, but property owners have the most fixed supply possible - they're selling house space, it's literally nailed to the ground. To paraphrase the root comment, the prices are set by how much tenants are willing/able to pay. Higher property taxes mean investors take less profit from housing, which means it takes longer for them to save enough rent money to buy more properties to lease. And therefore less money with which to drive up the bidding war prices.

Rents would stay the same. The supply of housing will not have changed and neither will the demand.

House prices would go down though - a house with a high recurring tax is much a less attractive investment.

Is that a tax on _property_ or a tax on _land_?

My city has several blocks of its downtown used for surface parking lots. If a lot with a building paid the same tax as the parking lot, how long do you suppose it would take for the parking lots to turn into skyscrapers with parking garages?

Of course, this would also force people to sell their property to pay the tax.

Singapore has social housing as well and it works well.