Assuming they're sold to owner-occupiers who were previously renting, you've increased housing supply in that segment of the market, but you've reduced supply in the letting market, so the net effect will be zero. It won't change net demand or supply across the market as a whole.

If they were keeping those flats empty, that would be a different story.

Housing can not be seen as an investment. We can not have it be an investment, and a necessity, at the same time.

Housing can not, and should not ever produce more returns than the most basic index fund. If it does, no matter how many you build it will still be inaccessible to many.

You may argue that well, if there is more housing then there will be less money to make from investing in it. But here’s the kicker: what do top share holders do if they suspect the operations of the company they have shares in is going to make their shares worth less? They work as hard as they can to change the operations and minimize what they can do.

The same is true when housing is an investment. A property owner will act in their own best interest to reduce the ability for their investment to become worth less money.

This could mean toxic environmentalism, where you don’t actually care about the environment, but you’re using it as an argument against building houses. It could mean actively not giving permits to new constructions. It could mean actively lobbying the government to prevent certain classes of homes being built. Heck it goes all the way to actively reducing side walks, public transportation, etc.

And this is why we can’t just say “uh build more”. The “lack of supply” is a symptom. Not a cause.

The cause is simply that we accept that real estate can be an investment vehicle.

In a sense, every house is unique, and land is certainly unique by it's location and also finite. There really are some number of acres within a particular distance of a city centre.

I guess my gut reaction is that your comment might be right (I am not sure) but strikes me as idealistic.

There’s a couple of things that can help here:

1. Right to build. No local government should be able to say no to you building a small multi family home or single family home on their land.

2. A graduated (by year) increase on renting income for homes. Places that had been rental residences for a few years prior to this also should be forced to stay residential for a while.

3. Empty home wealth tax. If a house has been empty for more than six months a year, it should be taxed a percentage of its fair market value based on vacancy months.

4. Mortgages returns on investment should be limited to a certain margin over inflation. Or just match inflation. More than that should be taxed.

Are these good ideas? Maybe, idk. I’m not the person that’s gonna come up with the model of how to accomplish this. But it’s potentially a starting point.

How would this work in practice and enforced?

Not really. The net effect would be a distribution of wealth across a broader number of people (former renters, now owners) instead of one person (landlord who is accumulating wealth by charging rents from a number of people).

I understand that we typically think of owning property as a means of increasing wealth, more so than renting. But this is only true because we let home values increase.

And it might not even be true now, if renters places their savings other investments.

Property taxes and maintenance costs continue forever.

A property that makes 5% of its value a year, when interest rates are paying 6%, is a bad investment.

Instead of 3-properties at $1 million (total) returning 0.05 million / year, you should sell those three properties and put $1 million into the bank and get 0.06 million/year.

Of course, the idea of land as an investment in the first place is one of the root causes (if not the root cause) of endlessly-rising cost of living, and we're long overdue to address that root cause (namely: by instituting land value taxes).

"My political opponent is attacking the middle class and their investments!"

Real estate is an excellent inflation hedge since as inflation goes up, the value of the real estate and the rent you can get for it both go up in tandem.

Another way to discourage rent seeking is to tax ownership of land more.

Not necessarily. Raising interest rates lowers inflation.

So increasing interest rates is a double-whammy on housing. The increased mortgage prices lowers home values, fighting inflation _AND_ causes future profits to be discounted (relative to the risk-free bond rate).

The housing market was overheating earlier this year because low 2.5% interest rates meant that people's monthly payments were much lower than people expected. But now that we have 6% mortgage prices, the monthly mortgage price is increasing (which will eventually force housing prices down).

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This is why rising interest rates is the main tool of the Fed right now. Its not the perfect solution, but its sufficient until Congress enacts lasting change (ie: policy changes that lead to an increased supply of our luxury goods). The bank can only change interest rates so much before it becomes unreasonable.

Going from 1% rates to 2% is in many ways a bigger change than say a 15% to 16% increase.

Make no mistake, the Fed are not idiots, they have been trying to introduce inflation for a long time, but initially they succeeded in asset inflation only. With the help of Covid and the war, they got their wish.

But wage inflation needs to match the goods/services inflation, because without it, borrowers will be even less able to pay their debts.

In order to really stamp out inflation, the Fed would need to raise the interest rate to 10%, essentially forcing the US to declare bankruptcy.

The Fed is hoping to introduce a mild recession, which, they hope, would reduce all kinds of inflation, without them having to raise the rates above 3.5% or so.

The idea that the rich pay interest to themselves is laughable.