Many o
rganizations, including the federal housing agency, argue that housing became more expensive because demand exceeded supply. Yet a summary by the Canadian Centre for Policy Alternatives shows that housing supply has actually grown faster than population for decades, even as prices soared. What drove up those prices was “banking practices that have directed excessive amounts of credit into the property market, and especially residential mortgages. As a result, buyers can bid prices up to ever-higher levels, resulting in a market where people must pay more for the same type of housing. Hence financialization can be defined as an inflationary tendency in the housing market that is induced jointly by banks’ desire to expand mortgage lending and buyers’ confidence that the value of their properties will rise.”
Read the story here. Similar conclusions that price rises were driven by low-interest have been argued conservative commentators.