The Towering Illusion of Affordable Housing

The recent demolition of apartments in China due to their high costs and low demand has highlighted the global phenomenon of over-building and housing shortages. This trend is driven by a complex interplay of factors, including high-end property development, price-fixing, and maintaining housing scarcity.

In Turkey, urban development is characterized by an abundance of residential towers, yet despite an estimated vacancy rate of up to 30%, prices and rents remain stubbornly high. This paradox highlights the profit-driven nature of high-end property development, which prioritizes returns on investment over providing genuinely affordable housing.

The dynamics at play in Turkey are universal: building high-end property, price-fixing, and maintaining housing scarcity are all part of a self-perpetuating cycle. Governments attempting to address the issue through measures like taxes on empty dwellings or subsidies for developers often end up exacerbating the problem.

Vancouver and Toronto provide striking examples of this phenomenon. Despite thousands of new apartments being built over the past 20 years, prices remain among the highest in the world. It wasn’t until immigration cuts, interest rate hikes, and tighter mortgage tests were implemented that prices began to stabilize. The Canadian government’s response was to announce a program to buy unsold condos for “affordable” housing, essentially bailing out developers from having to lower their sale prices.

Australia is no stranger to this phenomenon. Real estate and infrastructure development have become the holy grail of urban planning, with governments clinging to the idea that market forces will somehow magically balance supply and demand. However, as Dr Kate Shaw, an urban geographer at the University of Melbourne, points out, this approach has only led to glaring social injustices – including widespread homelessness.

Developers know that building high-end property is where the real money lies, and when profit margins are threatened by increasing construction costs or government regulations, they simply stop building. This scenario poses a nightmare for governments: what happens when private markets resist attempts to bring prices down and refuse to build genuinely affordable housing?

To break free from this cycle, governments must take a step back from their free-market ideology and acknowledge that they have the resources and capacity to build housing when and where the market cannot or will not. As Dr Shaw notes, Australia is a rich country – we can afford to invest in building truly affordable housing.

However, this requires a fundamental shift in thinking: acknowledging that private markets are not equipped to solve our affordable housing crisis, and that governments must take an active role in addressing the issue. Policymakers should stop relying on propaganda-filled state visits and start listening to those who know what it means to build truly affordable housing – like Dr Shaw, who advocates for a return to traditional methods of building.

Our cities are still beautiful, but they’re fragile. They need governments that will take responsibility for addressing the dark realities of our world, rather than perpetuating the illusion that more towers will somehow magically solve our problems. It’s time to stop building high-end property and start building affordable housing – before it’s too late.