Dave Lisle, Mullumbimby
NSW Govcorp recently announced that the West Byron rezoning has been approved.
The rationale that the development is a solution to the problem of housing affordability is a classic example of the obfuscation of public policy.
This convenient justification is based on the simple assumption that increasing supply decreases price. But the laws of demand and supply work in funny ways.
For certain goods and services such as bananas, the inverse relationship between supply and price – as attested by cyclone Yasi – is pretty sound.
For ‘housing stock’ though, the story is far more complex.
There are the issues of (1) ‘demand elasticity’; (2) the fact that local real estate prices are largely set by the national market; and (3) that housing is (unfortunately) an ‘asset’ that people invest in to make speculative gains or to prevent being locked out of the market by speculators. Planning ministers should consider these.
Simple recourse to the beguiling laws of demand and supply suggests that Govcorp is either confused by economics or full of shit. My guess is both.
