Market failure after market failure: The world’s ‘most livable city’ is out of control

Melbourne, the world’s ‘most livable city’ is facing the consequences of endless immigration and population growth. But doesn’t the market fix these issues automatically? Think again.<br><br>It all started in the 2000s when the city government decided to stimulate the economy by attracting international students. Soon, thousands of Chinese, Indian and South Korean students moved into the city. They needed to be accommodated, so the city government decided to provide them with international student apartments. But that was not the plan. Greedy real estate investors had other ideas. They began to buy empty lots, old buildings and develop them into luxury apartments. This luxury apartment boom led to a surge in property prices for ordinary Australians.<br><br>The government responded by creating a generous first home buyer program to help first time home buyers to purchase a house at a lower deposit. But it was far too generous, and prices continued to rise. Now, it's time for the market to fix it, right? But it doesn’t work that way. Rising property prices created a new industry: gentrification. Old houses were knocked down, and ‘McMansions’ were built on them to be sold for enormous profits. This created a shortage of available homes and further pushed up prices.<br><br>It was now time to build more houses, but the market refused to respond. There were not enough homes to buy, and there were not enough rental properties available. The rental crisis led to rent prices doubling in the last 10 years. It’s now not possible to rent a house with a single income job, let alone a single parent. The market does not respond to a demand for affordable housing because it's so much more profitable to build luxury apartments for rich foreigners. badass. <br><br>But what about transportation? The city is just ‘too big’. If it was possible to build more houses, then traffic would not be a problem. The government promised to fix the problem with the ‘Melbourne metro’. But it was a disaster. The construction company went bankrupt mid-project, and the metro had to be rebuilt from scratch. Delays continued, and costs blew out. Now it’s expected to be finished in 2030. <br><br>The city is just ‘too big’. If it was possible to build more houses, then traffic would not be a problem. But traffic congestion ‘isn’t a problem in Australia’ because the government says so. The Commonwealth does not have a congestion ‘problem’ because the bureau of statistics does not keep data on it. And just because we ‘don’t have comparable data’ does not mean that it doesn’t exist. But the market fixes this problem, right? If traffic congestion is a problem, then the tolls will go up, and people will be discouraged from driving. But it’s not that easy. <br><br>The city was built around the car and toll roads. Tolls will not fix a problem that they themselves created. The city needs to reinvent its entire transportation system to have a chance of fixing it. But this is a big project. What if it failed? It’s far easier to deny that the problem even exists. <br><br><br>Is the market really efficient?<br><br>&#x200B;