Today's house prices are, to put it simply, the result of too much demand and too little supply. I will outline my proposal below, but unfortunately it is not without a little background.
Housing oversupply is an issue that has been going on for decades (the attachment shows the number of new homes built by time period), but it has really come to the fore in the last few years. All the developable land in the major centres has already been subdivided and built on, and the owners have no interest in selling. As a result, it is rare for investors to get their hands on cheap land in city centres and then not be able to exploit the land to its full potential due to strict building laws and restrictions on new developments by the local population.
We Slovenians ourselves are to blame for the over-increase, because we want to invest every euro we have in real estate. The result is that today more than 300 000 Slovenians own more than four properties, and even more own three or two. As a result, even the few newly built homes are being bought up by those who already own property and are paying off their loans by renting them out. And so a vicious circle is created, where house prices are constantly rising and young people are finding it harder and harder to get a home of their own.
My proposed solution:
- Taxing all residential property except the first one with a 2% property tax would make buying a second property a bad investment and Slovenians would invest their money elsewhere.
- A much higher compensation for the use of building land would force owners of poorly used land in cities to sell their land to investors.
- Cities that are the centres of cohesion regions would become special zones, the size of which would be proportional to the population of the region, and building legislation would be relaxed in these zones.
- The new revenue from property tax and building land allowance could be used to abolish income and corporate taxes, which would raise the standard of living for Slovenians.
Low property prices should be in the interest of all Slovenians. The advantages of agglomeration are lower energy consumption and environmentally friendly policies, higher economic growth at the expense of less money spent on maintenance of local infrastructure, fewer young people going abroad in search of better opportunities, higher birth rate of first property owners, better health of people (less anxiety, depression, asthma, obesity, cardiovascular diseases, etc.), etc...