By Scott Kinzel
Consider a modern city, loved by tourists and home to a thriving economy and a lot of industry. Your property market is starting to feel a bit tense. As one academic who grew there said, “the prices here began to take off and in a few years they grew at an annual rate of more than 15{dd299c883823a46beb0705d70a03c819bede140f906792bc593d52b8d4c5e8ee}”, after the housing crisis came to an end.
It’s not just about San Francisco, New York or Austin. It is same with cities as well.
“The sharp price increases are making the affordability of urban housing a pressing problem around the world. For central bankers, who are primarily responsible for financial stability, affordability is not always the most important concern. However, extreme examples show that this can become a problem for broader economic well-being.” This was noted by Knot.
Knot and many other authors said that cities are becoming more popular with has lead to demand for urban houses.
In a 2017 story, Market Watch quoted an economist who commented that the 15 largest metropolitan areas in the US UU They represent more than half of the national GDP.
This activity, not only jobs and education, but also what researchers place under the umbrella of “cultural events, creativity, recreational opportunities and, of course, the presence of other people”, attracts people, which reinforces the appeal for people with similar backgrounds. (By the way, it’s not just about well-educated, mobile young people; it’s also about recent immigrants.) By 2100, scholars estimate that 80{dd299c883823a46beb0705d70a03c819bede140f906792bc593d52b8d4c5e8ee} to 90{dd299c883823a46beb0705d70a03c819bede140f906792bc593d52b8d4c5e8ee} of the population will live in cities.
In Australia, for example, households are increasingly leveraged, even as investors are increasingly accumulating in the market.
This is because much of the housing problem is, as noted, local and because it is rooted in the low supply. Central bankers cannot do much about local zoning laws or residential developers who want broader margins; they can only help increase or decrease the demand, either through loan rules or interest rates.
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