Quote:
Originally Posted by Traum
Purely as a matter of discussion -- would draconian government interventions into the housing market work to restore some semblance of affordability?
Borrowing from the worst possible example that I can think of -- the Mainland Chinese housing market in China has gone to shxt -- certain places are seeing tremendous upward pressure, while other cities have markets tanking. In its typical control freak fashion, the Communist Party has implemented "reference pricing" as well as "minimal per square meter" pricing, depending on what is happening at specific cities. In essence, in places with red hot markets, the government comes up with a "reference price" for each area (in the city), and the reference pricing model disallows transactions that differ from the reference price by more than 15%. Banks are also only allowed to issue mortgages based on the reference price, not the actual transaction price.
In places where the market is tanking, the minimal per square meter price disallows transactions where the per square meter price is lower than the reference value. The obvious result is artificially inflated RE prices, and RE transactions pretty much drops to nothing. But people wouldn't be saddle with negative equity.
For the artificially suppressed RE pricing to work, draconian measures would have to be implemented to limit RE ownership -- no foreign ownership, maybe at most 1 investment property per person/household at most, stiff penalties for breaking rules, etc.
As a rule, I generally believe in the free market for most things. But with housing affordability being such an important issue, I wonder if government intervention might actually be needed somehow, and I wonder what sort of consequences -- esp the bad ones -- might result.
|
The issue with RE is that politicians have no clue on how to handle it. They only point at a scapegoat and claim they have a solution for it to get your votes.
The main issue with Canadian RE is why are foreigners able to buy Canadian RE at such a high valuation? What are the reasons that Canadians with a Canadian education (post secondary included, especially on how many international students we get) cannot buy RE yet a foreigner can?