The people outside the town who buy houses here either expect to rent them expensively, or to use them as an investment because they expect the costs of housing to grow. (Or a combination of both.)
Refusing to build more houses means doing exactly the thing they want—it keeps the rents high, and it keeps the costs growing.
If you have 500 000 people in the town, and 100 000 houses are owned by people outside the town, you should build more houses until there are 600 000 of them (i.e. not only 500 000). Then the people outside the town will find it difficult to rent their houses expensively, and may start worrying that the costs will not grow sufficiently to justify their investments.
Thankfully rising land prices due to agglomeration effect is not a thing and the number of people in town is constant...
Don’t get me wrong, building more housing is good, actually. But it’s going to be only marginal improvement, without addressing the systemic issues with land capturing a huge share of economic gains, renting economy and real-estate speculators. These issues are not solvable without a substantial Land Value Tax.
The people outside the town who buy houses here either expect to rent them expensively, or to use them as an investment because they expect the costs of housing to grow. (Or a combination of both.)
Refusing to build more houses means doing exactly the thing they want—it keeps the rents high, and it keeps the costs growing.
If you have 500 000 people in the town, and 100 000 houses are owned by people outside the town, you should build more houses until there are 600 000 of them (i.e. not only 500 000). Then the people outside the town will find it difficult to rent their houses expensively, and may start worrying that the costs will not grow sufficiently to justify their investments.
Thankfully rising land prices due to agglomeration effect is not a thing and the number of people in town is constant...
Don’t get me wrong, building more housing is good, actually. But it’s going to be only marginal improvement, without addressing the systemic issues with land capturing a huge share of economic gains, renting economy and real-estate speculators. These issues are not solvable without a substantial Land Value Tax.