EDITORIAL: Imagine that: Rents fall when more housing gets built
Nevada Democrats worried about an affordable housing “crisis” tend to look toward California for “solutions” — proposals such as rent control, more generous taxpayer subsidies and additional mandates on builders too often infiltrate the debate. Perhaps they instead should look beyond the Golden State — all the way to Down Under — for the most promising approach.
Scott Shackford of reason.com reported this week that Sydney, Australia, has found the answer to rising rental costs: Allow developers to increase the housing stock.
“An investor-led building boom has almost doubled the size of the Sydney apartment rental market in two years,” the Sydney Morning Herald reported last week, “forcing landlords to drop rents more than $100 a week in some areas to secure tenants.”
Imagine that.
Over the past year, almost 31,000 new multi-unit dwellings have been constructed in the city — and another 200,000 are in the pipeline. As a result, prices are rapidly declining. The newspaper noted that there are livable neighborhoods in Sydney — population of about 5 million — where a one-bedroom apartment can now be had for under $500.
“The glut ranges from simple apartments to townhouses,” Mr. Shackford writes, “highlighting an outcome understood by those who are simply begging cities to allow more housing of any kind to be built: An increase in the supply of middle- and upper-class housing will give better choices to people moving up the economic ladder, freeing up older housing and making it more accessible for people with lower incomes.”
That runs counter to the notion — cherished among progressives — that elected officials must, as a condition for permitting, force developers to set aside a certain percentage of new construction for “affordable” units. In fact, as Mr. Shackford notes, simply increasing the overall supply of available rentals will benefit prospective tenants regardless of their economic status. Review-Journal columnist and distinguished legal scholar Richard A. Epstein made the same point on these pages in a September essay.
Last month, President Donald Trump signed an executive order creating a new federal panel to explore ways to eliminate regulatory barriers to housing construction. This will potentially exert pressure on local governments to re-evaluate many zoning and other restrictions that discourage builders from increasing supply.
The initiative is long overdue and deserves more attention from policymakers scratching their heads over the dearth of housing and rental stock in many parts of the country. As the lesson of Sydney highlights, allowing entrepreneurs and investors to meet demand will do more to ensure the existence of affordable housing than meddling politicians and bureaucrats ever will.