Global Topic: Changing Communities
Current Research Question: To what extent do countries offer assistance to first time house buyers in an increasing climate of property price rises
Introduction
For this research report, I will be investigating to what extent do countries offer assistance to first-time house buyers in an increasing climate of property price rise. It is essential for the young generation to study the increasing climax of the property market due to its detrimental effects in the near future of thousands of young people. In order to fully understand the issue, we must explore two different perspectives, both nationally and locally, additionally globally. Within these perspectives, we will be examining this issue through three different viewpoints: the government, architects, and first time home buyers.
Causes and Consequences
Around the world, many who are lucky enough to live in an industrialized country have to face the problems of high property prices. This is due to low supply in the housing market, with the following factors of: high interest rates and mortgage rates, resulting in a competitive market. However, first time home buyers are caught in the midst of the factors when they are only trying to make their way to homeownership. First time home buyers will have to attempt to make a quick decision with a satisfactory deal in order to avoid other high bidders for the same property, or they will have to bid high. However, as the housing supply is low, it will be difficult for first time home buyers to successfully buy a home due to their inexperience in the housing market. If mortgage and price rates continues, worldwide supply and demand for houses would be imbalanced. According to the National Association on House Builders, the projected supply for houses will “fall short of 1.2 million homes” in the coming future. In Seattle, Andrew Stubblebine, a first time home buyer, experienced the inflated mortgage rate and property price. He had only been browsing a house for a year before he decided to properly buy a house, however he had regretted it after seeing the unanticipated high rates and prices. When rates increase, those with lots of money in their savings, a money market account and a certificate of deposit will benefit from the sudden high increase. Unfortunately, first time home buyer, home builders and stock investors will most likely have the least to gain. To summarise, our world is currently low on supply of houses which results in high prices and mortgage rate; making it difficult for first time house buyers to own a house. Although governments are planning to build more houses, this will not be able to meet the demand.
In addition to industrialized countries, good economies lead to high prices. Nowadays, many citizens in a good economic country have a satisfactory, stable job, earning a secure amount of money. With a stable amount of money, citizens have the right spend as much as they want, which leads to many rich people investing in the real estate market, also known as investors. Investors like to invest in the real estate market because there are many ways to make money out of it such as: buying low priced houses, selling at a high price, buying rental, selling to companies or businesses and renting out units. Currently, many investors in the real estate market are buy more houses hoping to them for a high price in the future, resulting in low supply. This is unfair for first time home buyers as they will not have the ability to choose the house of their choice at a low price, and run out of houses to buy. Aforementioned, first time home buyers will be at a disadvantage due to low supply, and high increase in mortgage rates and prices. In result of all of this, homelessness will increase in even the richest cities as investors are grabbing the best deals and outbidding first time home buyers. In 2015, research collected by Habitat for showed that there were approximately 1.6 billion people, worldwide, who lacked our basic necessity, shelter. As the population rapidly increases, an increase in homelessness will concurrently increase with it. Therefore, the better the economy of the country, the more likely citizens will have to endure high property prices, wealthy investors and more chances of becoming homeless.
Recently in the United States, President Donald Trump has raised the tariff up to 21% for Canadian Softwood Lumbers, and they are harming several American first time home buyers and house buyers. The drastic rise in lumber tariff is beneficial to Canada and the United States because America needed to satisfy the housing market’s need for Canadian lumber, and Canada was able to earn more money due to many Canadian softwood lumber that were needed to be sold. The newly imposed tariff affects housing prices because many American are produced from Canadian lumber. Due to the sudden raise in tariff, the cost for Canadian lumber will concurrently increase with the new housing prices. Since then, according to the National Association of Home Buyers, all housing prices has increased by 7%, and on average, an increase 1,360 USD on every new built home. In addition, home construction costs will increase. First time home buyers will have a difficult chance of buying the house of their dreams, and will instead settle for smaller, old and cheaper homes. To add on, the demand for new investments on house and new houses will decrease due to its drastic high prices, which will ultimately be detrimental for the housing market. However, those who are already invested in the Canadian Softwood industry will benefit from this tariff, as it has suddenly peaked in selling. Overall, the lumber tariff has created an adverse response from the housing market and first time home buyers, and essentially, has not assisted America’s first time home buyers.
For the past few years in Hong Kong, Hong Kong’s neighbour, China, has been bombarding Hong Kong with its richest investors. A majority of these invstors
Course of Action
My first suggestion to help solve this problem would be to create small residential pods, manufactured from concrete water pipes, for first time home buyers. Currently in Hong Kong, an architect famously known as James Law has created prototypes of small residential pods called OPods. They offer 100 square foot of living space to residents, have the ability to slip into small empty alleyways or can be placed on small available land, and stack onto each other. It is modern, and will be placed in cities which will be convenient for buyers.However, this is a short-term solution for first time home buyers as the living area is small and will be sold out for 15,000HKD, a high price. Additionally, as less land will be available, less space will be available for these residential pods. Unfortunately, this cannot serve as a long term solution as it is sold at a high price which will continue to increase and will become unaffordable for first time home buyers, and land availability for residential pods will decrease and human population will increase. However, this is practical solution as it is small, modern and is an excellent space saver.
Questions:
What is the course of action/solution/scenario that you are presenting?
Where has this been used before? Give an example or case study
Why do you feel it would be effective in helping to solve your issue?
Are there any negative impacts or implications of your proposed solution?
What will it cost?
Who will it affect?
Might some people be impacted detrimentally?
How practical is it?
Will it last long term?
Will your suggestion affect other groups?
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