No matter how much builders make, if there is no limitation on the use of housing as speculative investment assets there will never be enough houses because speculative investors don’t buy houses for people to live in, they buy houses to ride the price bubble and sell later for a profit.
Just look at what has been going on in London (UK) for more than a decade - certain buildings made for sale to investors are almost empty of residents even though all the units were bought: the buyers simply don’t live there and don’t even want to rent because they don’t want the hassle of tenants or the loss in value from the apartment actually getting used (this is more so in the Luxury segment were there’s probably more units than people living in London who can and are willing to pay luxury rents)
With speculative investment the Demand side of the housing market is not limited to “how many people need a house”, it’s limited by that PLUS “how much money do speculative investors have to invest in housing”, so that’s basically how much money all high net worth individuals combined are willing to put in it plus how much money can banks lend against real-estate as collateral, and in this new Era of High Inequality the first number is huge and given that banking nowadays operates on Fractional Reserve Banking rules (basically banks can create from thin air up to 97% of their loans) that second number is even more larger.
Investor demand pumped up by cheap finance on the Demand side of housing are driving the real-estate bubble way more than reduced construction is driving it on the Supply side.
Builders are doing pretty good. When you can ignore minimum standards and sell a house for a million that you spent a couple hundred thousand to build, you can rake in the cash.
It depends on where you live. Building in the Netherlands is a compliance hell hole and you end up with a very large portion of the cost being getting permits, doing environmental assessments etc.
In the UK you have to go through a local council that will refuse pretty much everything you want on top of the Netherlands issues.
This is pretty much the reason why builders are focusing on high value and luxury apartments since a bigger project benefits from scale on the permitting side.
the builders are the ones who provide housing and collectively they make nowhere close to the amount the houses they make sell for
And that goes double for the actual carpenters, plumbers, and electricians that do the actual building.
No matter how much builders make, if there is no limitation on the use of housing as speculative investment assets there will never be enough houses because speculative investors don’t buy houses for people to live in, they buy houses to ride the price bubble and sell later for a profit.
Just look at what has been going on in London (UK) for more than a decade - certain buildings made for sale to investors are almost empty of residents even though all the units were bought: the buyers simply don’t live there and don’t even want to rent because they don’t want the hassle of tenants or the loss in value from the apartment actually getting used (this is more so in the Luxury segment were there’s probably more units than people living in London who can and are willing to pay luxury rents)
With speculative investment the Demand side of the housing market is not limited to “how many people need a house”, it’s limited by that PLUS “how much money do speculative investors have to invest in housing”, so that’s basically how much money all high net worth individuals combined are willing to put in it plus how much money can banks lend against real-estate as collateral, and in this new Era of High Inequality the first number is huge and given that banking nowadays operates on Fractional Reserve Banking rules (basically banks can create from thin air up to 97% of their loans) that second number is even more larger.
Investor demand pumped up by cheap finance on the Demand side of housing are driving the real-estate bubble way more than reduced construction is driving it on the Supply side.
Builders are doing pretty good. When you can ignore minimum standards and sell a house for a million that you spent a couple hundred thousand to build, you can rake in the cash.
It depends on where you live. Building in the Netherlands is a compliance hell hole and you end up with a very large portion of the cost being getting permits, doing environmental assessments etc.
In the UK you have to go through a local council that will refuse pretty much everything you want on top of the Netherlands issues.
This is pretty much the reason why builders are focusing on high value and luxury apartments since a bigger project benefits from scale on the permitting side.