There is an earlier post by me on the subject of land at AATW.
The price of land has become a problem in the western world. The difficulty young people face in obtaining a home is having an adverse impact on maturity and family, both of which are important parts of a healthy, functioning society.
A number of factors are contributing to this problem. One of them is the attraction of land as an investment, which has led to high rents and high resale prices and foreign money (not all of it licit, see analysis of money laundering in global property markets) entering the national market.
Historically, the treatment of land as an investment has always been a problem. Humans naturally want to make a profit (and as much profit as possible), so this factor by itself cannot fully explain the current crisis. We must look elsewhere to understand what is allowing the market to create such high values for rent and sale prices.
Another factor is the role of planning (in the UK) and zoning (in the USA) and the equivalent policies and practices in other countries. This constitutes an artificial interference in property markets. Where land has planning permission permitting the construction of a housing estate or commercial property, the land owner can charge the developer a lot more than land that is restricted to, say, farming purposes.
These restrictions are not the natural result of the land’s nature but of the purposes and ideas of man about what is suitable in a given area. Furthermore, in order to obtain permission, at least in the UK, it is possible for the local council to accept a covenant on the part of the developer to pay money towards building infrastructure, which will have an impact on prices and profit margins.
The costs of development, including legal costs and costs associated with planning permission, are a further factor in the housing crisis. Certainly in the UK construction industry, profit margins are narrow. Where it is difficult to carry on work in a given sector, and difficult for new competitors to enter a sector, it is likely that there will be supply problems.
This leads naturally to a consideration of supply versus demand. Demand continues to grow apace in general terms, (though see research about specific variables: class, nationality, ethnicity, and gender). Supply appears not to be keeping up with this demand.
The problem is further exacerbated by the flocking of people to particular conurbations, because that is where the work is. This market factor creates a vicious cycle, which can only be broken if we can make more of an effort to implement working from home. This will counteract the need to live near where one works.
Wages have not kept pace with living costs. People from different political ideologies are right to point this out, even if they are wrong in their prescriptions for the cure of this problem. Our broader economic malaise, in combination with out social problems, works in a vicious cycle here.
Mortgages are the last factor I wish to consider (though no doubt there are others that you, dear reader, might suggest in the comments below). Where loans (and large ones at that) are (relatively) easily available, landowners will charge a higher price for their land. Those who buy the land will charge a high rent in order to pay off the high price and make a profit on top.
I leave it to you, dear reader, to share your thoughts on these problems, including a package of reforms that might help us address the crisis. God speed.