The Midwest US can assure you that they've definitely already tried this. We're literally mowing down every cornfield for housing here (I'm typing this from a neighborhood with thousands of units, 90% of all buildings here were built after 2012). It never works, prices are still at an all-time high, even for units on the market 6+ months or longer.
"Just building more" alone isn't ever going to lower prices enough to make housing affordable for most, no matter how many more units you build.
You have to decommoditize housing, or stop force-preventing natural depreciation, or at least put ownership caps on it, or some other thing in addition to the construction.
You can't say it never works because your definition of "works" is completely off base.
The population is continuously growing. We must build housing as fast as it grows to just maintain parity, and even faster to reduce prices.
Saying building new houses doesn't work to lower prices is like being in a boat taking on water and after throwing a couple buckets of water overboard saying "bailing out water doesn't work" because there's still water in the boat.
Unless you ban immigration and babies, you have to build strictly faster than new people arrive. Wealthily people with multiple houses are not the driving problem behind housing shortages.
People can afford a higher price at a lower interest rate, but in aggregate they're getting just as much house for their money. Why is that bad? Perhaps because prices will collapse later when interest rates rise? It doesn't seem like an affordability problem exactly.
- A bunch are staying un-bought and remain empty. (The bottom of the market is closing in hours, the top of the market is sitting for months)
- A bunch are technically getting occupied, but buyers are having to go way beyond their means to get them. (2008-style, except it's not their fault, you have to live somewhere or die, and you can't manufacture used housing, so it's hard to fault them for taking on risky mortgages. There simply isn't cheaper options)
- A bunch are getting bought and turned into luxury rentals, and those rentals are getting occupied. (This might seem like a win, since the end result is people-in-housing, which should be a good thing. But forcing people into unaffordable rental rates permanently hollows out those people's finances, it's super unhealthy unsustainable housing strategy)
- A handful are getting bought and getting turned into illegal unlicensed hotels. (Permanent "Air-BnB-s").
- A bunch are getting bought and stay empty. (According to local realtors, "second-home" purchases are up 300% since 2019. Generally, this is wealthy or upper-middle-class coastal urbanites realizing the currency conversion between the coasts and the midwest, and using that to their advantage)
Individually none of these are the worst thing or the primary culprit. But added all together, it means that "real people buying houses to sustainably live in", is the least likely scenario for any given home on the market right now here. "Demand" is super high, but most of the "Demand" is kind of fake-demand (demand from finance, demand from investment, demand for vacation -- but not demand for housing to house people).
> Where are all the people coming from?
They aren't coming. House prices are up 250% this decade, but we've only got a ~1.5% YoY population growth rate (for our city) and a 1% population loss YoY (for our state). We aren't a major city, and we've built more new housing units than had actual new population for 5 years straight now.
But isn't this creating a house of cards? Or are we heading towards China, where there are in many cases more apartments than people and yet prices have never fallen in the last three decades.
If a large fraction of the dwellings are truly unoccupied then it is a bubble plain and simple.
If it's just a matter of out-of-state money willing to pay a high price to own houses that they can then rent out for a high price after cornering the market, then it's less clear.
Housing supply hasn’t decreased in london, but demand has.
Housing costs are driven by what people will pay, which is driven by salary, there’s always an option to not pay for housing in london - housing in Stoke is cheap, and not much further commute from Bloomsbury than say surbiton. Places like Luton are cheap and are a very respectable commuting distance, but people will pay far more for a house in Hackney
What people will pay is not driven by salaries, it is driven by how much bank will lend.
If tomorrow the banks offer a 1000-year loan you can pass on to your children, people will take it and single-bedroom apartments will cost 50 million plus.
Prices will go down.