Supply and demand works in housing
Glasgow's housing crisis has one root cause: demand for homes far outstrips supply. Rents rise when there are more people looking for homes than there are homes available. They fall — or rise more slowly — when supply meets demand. This is not a controversial economic claim. It is the same mechanism that governs the price of every other good and service.
What is striking about housing is how much empirical evidence now backs this up, across different cities, countries, and research approaches. The studies below use different natural experiments and different methodologies — and keep arriving at the same conclusion.
Auckland upzoned 75% of its residential land in 2016. Rents rose 22% over the following eight years — compared to 34% nationally and 36% in Wellington. Lower Hutt acted alone, upzoning 80% of its land. Construction tripled. Rents fell 21% relative to comparable cities. Minneapolis, Austin, Helsinki, and others show the same pattern. The cities that build more consistently see rents rise more slowly, or fall outright.
The evidence keeps pointing the same way
Matthew Yglesias, one of the most prominent advocates for housing supply in the English-speaking world, has noted that the empirical literature has now accumulated to the point where the result is no longer in serious doubt. The papers below represent the core of that evidence base — each using different cities, different natural experiments, and different methodological approaches, arriving at the same conclusion.
Studying new market-rate apartment buildings across 11 major US cities, the researchers found that new buildings decrease nearby rents by 5 to 7% relative to comparable locations that did not receive new development. Contrary to common concerns about gentrification, new buildings slow local rent increases rather than initiate or accelerate them — and increase in-migration from low-income areas. Read the paper →
A clever natural experiment: using serious building fires as a source of random variation in where new construction gets built — stripping out the confounding effect of high-demand locations. The result: rents fell by 2% and displacement risk fell by 17% within 100 metres of randomly located new construction. The paper won the Urban Economics Association Prize for best student paper and has been cited extensively by researchers and policymakers. Read the paper →
Using weather-shock delays in housing completions as a natural experiment across Germany, researchers found that a 1% increase in new housing supply lowers average rents by 0.19%. The effect was equally strong in high-demand markets, and lower-quality units saw equivalent rent reductions — disproving the idea that supply benefits only high-end renters. Read the paper →
A comprehensive synthesis of the most recent rigorous evidence, updating an earlier 2019 review. The conclusion: increases in housing supply lead to decreases in city-wide rents and slow rent growth in surrounding neighbourhoods. The review also found no evidence that new supply causes elevated displacement of lower-income households — one of the central fears behind opposition to new development. Read the paper →
New homes benefit the poorest renters most
A persistent objection is that new market-rate homes are too expensive for most people, so building them cannot help those who need housing most. The empirical evidence consistently runs the other way — and the mechanism is well understood.
When a new, more expensive home is built and someone moves in, that person vacates a home somewhere else in the city. The household that moves into their old home vacates another. The chain continues until a vacancy opens in an older, cheaper property that a lower-income household can access. This process — filtering — means that new supply at any price point benefits renters across the income spectrum.
Crucially, the evidence shows the benefit is largest at the bottom. The chain of moves ends in the oldest, cheapest stock — the properties with the thinnest margins and the highest rent burden. It is precisely the renters least able to absorb rent rises who benefit most from new supply at the top of the market. This is not a side effect or a trickle-down hope. It is what the data consistently shows.
Tracking the chain of moves triggered by new market-rate apartment construction across US cities, Mast found that each new market-rate unit created a chain of roughly three moves. The final units in the chain were occupied by households in the bottom income quintile — and the strongest rent reductions were in the oldest and cheapest properties. New homes built for higher-income households directly freed up affordable housing for lower-income renters, with the largest effect at the bottom of the market. Read the paper →
Where we stand
YIMBY Glasgow supports building homes of all types — social, mid-market, and private. The evidence is clear that market-rate housebuilding is the primary mechanism by which housing crises get resolved, and that it benefits renters across the income spectrum. The case for building more is not ideological. It is empirical.