> The problem is that anyone can buy a house in the UK and they've become investment vehicles.

Doesn't that imply that there is a shortage?

If you're competing with the the whole world - sure. But I have a personal belief property is one of the things that shouldn't be so freely purchasable. Want to buy and own a property in the UK? Fine, be a UK citizen then.

Look at how Denmark do it:

"Unless you have lived in Denmark for a period of at least 5 years, you must obtain permission from the Danish Ministry of Justice (Justitsministeriet) to buy property. However, this restriction does not apply if you are an EU-citizen, and if the property is to be used as a permanent residence."

https://international.kk.dk/artikel/buying-home http://um.dk/en/travel-and-residence/family-and-legal-issues...

Seems reasonable to me. Maybe stop shell corporations based in tax havens from owning property as well? Seems they benefit from the income while paying that the government doesn't even get.

>Doesn't that imply that there is a shortage?

A shortage of housing? A shortage of ways to launder money? A shortage of safe assets that beat inflation? A shortage of network connected land?

Emulate Tokyo is good advice, but not easy. There's a reason Tokyo is Tokyo and everywhere else looks nothing like Tokyo.

The claim I've often heard repeated [1] is that there are investors who leave their properties unoccupied rather than renting them out, satisfied to bank the returns from price appreciation without the hassle of tenants. So-called "buy-to-leave" properties. For example, one report found just 19 out of 80 apartments in an expensive development were occupied [2].

This has the pernicious effect that it undermines people's belief that increasing supply/housing density will lower prices. After all, why fight for something you don't think will benefit you?

Instead, people who believe such things prefer policies of government intervention, like social housing, taxes on empty properties and suchlike.

[1] https://pbs.twimg.com/media/DXSUbv3X4AAO-dK.jpg [2] http://uk.businessinsider.com/property-partner-20000-ghost-h...

Yeah there's kind of a "goes with the territory" thing with large cities with high demand -- they are investment vehicles because demand for housing is so high and growing relative to available supply.

> Doesn't that imply that there is a shortage?

Initially it probably did, but once the ball get's rolling it just implies that there are people willing to buy. That can be other investors in a bubble.

comparing aggregate rates of household formation vs housebuilding doesn't tell you very much as household formation is dependent on housing supply.

in the absence of supply constraints, if the price goes up this creates an incentive to build more houses, which will balance out any increased demand. there is also good research that shows supply constraints do matter in the UK - http://personal.lse.ac.uk/hilber/hilber_wp/Hilber_Vermeulen_...