Housing costs

[danbrotherston]

That's quite a leap to make. Housing is a relatively inelastic good so reducing the price to match a reduction is cost might not result in a new equilibrium. I mean, are you suggesting highly elastic and competitive goods producers aren't perpetually looking for ways to cut costs to increase profits? How often do your favourite products decrease in price when worse, cheaper materials are used and labor is off-shored?

Again, if we need to be absolutely perfect in our approach before we ever think about doing any public policy, we won't get anything done. 

Development charges have increased well over inflation every year since they were created. If we can't try to reduce the actual cost of housing until we eliminate the artificially limited supply first, then we should just give up caring about housing now. And yes, fees and taxes are a cost just as much as material and labour. If we increase the supply of homes, we will lower the price. If we remove costs, we will lower the price. If housing was as inelastic as you guys say, then developers should be able to charge whatever they want and have much better margins than they do today in 2025. Developing seems like a very shitty industry with bad margins - despite sitting on a good they can charge anything for...

How did we pay for things before DCs? Can anyone remember back to the ancient history of "the 90s"? I find it offensive that someone trying to buy a house today and start their life has to pay fees that didn't even exist for previous generations, let alone grow by 100% yoy. What is the purpose of taxes and public debt if they are only used to support some people and not others?

The thing is, I agree with you about lowering development charges, but your statement on economics is simply wrong.

The price of something is dictated not by what it costs to make something but instead by how much people can and will pay for it.

Lowering (or raising) the cost of making that thing affects more about whether it is built and in what form. That can and does indirectly affect price through supply but it isn’t that simple. If tomorrow, apple got a discount on screens for their iPhone the price would never change to reflect that unless Apple chose to use that increase in profit margin to achieve some other goal like increased sales volume. But there’s no rule of economics that says that must happen. 

And housing supply is constrained in many other ways and the prices are also dictated as much by the secondary market as the primary. 

Lowering development charges needs to be part of a larger policy effort to reduce (or even stabilize) prices to be meaningful. IMO.