Ireland,it was revealed today,has 2,066 “ghost”estates,unfinished developments of two or more dwellings.
This is the physical manifestation of a lack of scarcity during an artificial boom.
During a housing bubble,it is wrongly perceived that there is a scarcity of land,labour or capital which is driving the price of houses ever upward.This demand then entices new entrants into the housing market,exacerbating the problem.
It is always too late when the realisation is made that the bubble has been caused by credit expansion due to artifically low interest rates.In this case,the European Central Bank printing money and selling it at interest rates lower than the natural interest rate would be,flooded poorly regualted territories,such as Greece,Ireland,Spain and Portugal with hot money
It is the availability of and demand for cheap credit rather than the scarcity of the asset it is used to purchase which drives price increases.
Land,labour and capital are all misallocated to the housing market where site prices,bricklayers hourly earnings and equipment hire go through the roof(pardon the pun!).
Home buyers in an inflationary market rush to purchase as the house they wish to buy will be more expensive tomorrow than it was today.Many will buy “off the plans” of houses in estates yet to be built at the top of the market,competing with buy to let investors in sleeping bags in overnight queues at real estate agents offices.
And then…the bubble bursts.
People end up living in unfinished ghost estates in negative equity,
Developers are chased by banks for repayments on loans they can no longer make,
Hundreds of thousands of employees lose their jobs in property and construction,
The entire economy of a nation grinds to a shuddering halt.

Scarcity is the reason that ..you breathe air freely everyday,but buy tanks of it for diving in the ocean
….you would exchange diamonds for a bottle of water in a desert
Scarcity is the first principle of all economics,whatever your leaning,but the principle always forgotten during a credit expansion.