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increases in price do not increase the supply of new builds
They kinda do. Or rather falling prices reduce availability of new builds as big builders like Barratt and Persimmon slow their rate of build if the market slows to control supply. Also smaller developers find it harder to get finance to complete their projects in falling markets.
Hefty-
Also smaller developers find it harder to get finance to complete their projects in falling markets.
The houses usually get built one way or another, though? Even if the bank has to intervene and wipe out the original developer's equity.
It's rare to see in the UK the situation they had in Ireland post 2008 where property prices fell so far that they were below construction cost (implying a negative land value).
NickCJ
Just checking, but I presume you mean low price elasticity of supply, here? As in, increases in price do not increase the supply of new builds or result in more second-hand homes on the market.
Always lovely to see the basic supply/demand pricing mechanism break when it comes to the largest purchase ever 🙃