The Dutch “Solution” to the Housing Crisis

In July, the Dutch Housing Minister has proposed a law that would allow municipalities to force homeowners to sell homes valued at less that 355,000 Euros to market only to low- and middle-income households. Like all coercive measures, the Dutch “solution” isn’t going to solve anything. Indeed, it will make the problem worse.

A Dutch professor of real estate correctly suggested that the proposal might lead to higher housing costs:

If I were a seller, I would tend to choose a list price above the limit. Doing so would remove the constraint.

He went on to say,

A solution which is administratively simpler than this proposal would be to use tax money to directly subsidize purchases by people who are deemed worthy.

The housing crisis isn’t being caused by who is buying houses. The crisis is being caused by a supply shortage—the demand for low- and middle-income housing far exceeds the supply. This is true in the Netherlands, the United States, and every other country with a housing crisis. The solution to any supply shortage is to increase production. In this case, that means building more housing. Restricting who can buy a particular house or providing subsidies doesn’t increase the supply of housing. In fact, offering subsidies only serves to increase the demand.

Rather than imposing more restrictions and controls on housing producers and housing sellers, we should be repealing laws that restrict housing production. This includes land-use regulations—particularly single-family zoning. Freedom, not coercion, is the solution to the housing crisis.

The Dutch “solution” isn’t really a solution. It’s simply a variation on the same policies that have been tried for more than a century. Those policies have always failed in the past, and they will always fail in the future.