Housing wrap-up
Podcasts, media, academic papers, the census, and all the latest housing discussions.
I want to share a handful of my recent writing about housing markets. Just like every past cycle, this current boom is generating a lot of interest.
There are two reasons for this interest. First, some people are making a lot of money from owning housing. Second, some people are spending a lot of money paying high rents and prices.
If you haven’t noticed, these two reasons are related. And they are not new. Here’s Charles Darwin noting the penchant for Aussies to whinge about rents and home buying.
From the diary notes of his visit to Sydney in January 1836.
Podcasts
I have a new Fresh Economic Thinking podcast. It is not distributed through Substack, so please find it on your preferred podcast platform. Like, share and subscribe, as they say. Here are the first episodes.
Is superannuation a scam?
Do we need more waste?
Will Bitcoin ever be a real currency?
Gas supply and corruption
Media
ABC Life Matters talkback radio segment discussing the pros and cons of swapping stamp duties for land value taxes.
More commentary on the NSW policy to allow first home buyers to choose a land tax instead of stamp duty is here at Michael West Media.
An interview with the Elephant in the Room podcast, focussing on housing supply, affordability, and my proposal to copy Singapore’s public homeownership system in Australia.
Classic posts
Here are some older posts that I think really make important points about housing that will probably interest new readers.
Public housing is way cheaper than rental subsidies
Property is an asset that makes capital gains as well as rental returns. Because of this, owning property and renting at a subsidised rate provides the same rental discount as a subsidy paid to renters for way less cost to the government budget.If a government makes building affordable housing profitable through subsidies, they should just do the profitable part too and develop the homes directly.The Hill @thehill
HUD @SecFudge: "We have to use the private sector as partners to try to make sure that we can build to scale. And the only way to do that is to make it profitable for them to build [affordable housing]." https://t.co/4q9r2t6gzrDid Germany and Tokyo really get affordable housing through planning?
So many people are talking about how Tokyo got its “cheap” housing through flexible planning regulations. I am not convinced.Why I am anti-anti-zoning
Where I make the case that being anti-zoning is not really sensible, as there isn’t evidence it has major effects on housing prices or the rate of supply.The sale price of housing is not its economic price
Where I explain that the rent is the “economic price” of housing (i.e. what you give up to consume housing rather than other goods and services) and that looking at asset prices of housing can be very misleading.
Academic papers
If you are interested in following my academic research, it is all here on my Google Scholar profile. Pretty much every article has a free version.
My latest working paper is What’s the rush? New housing market absorption rate metrics and the incentive to slow housing supply. Here’s the abstract.
Why do housing developers voluntarily slow their rate of new housing production when they make money from selling new homes? This question lies at the heart of current aca- demic and political debates about the effect of planning and zoning on housing markets. Any answer must consider the market absorption rate—the rate of new sales that max- imises economic gains to property ownership over time. How this rate varies with market conditions, outside of any potential planning constraints, is hard to observe.
We propose four new absorption rate metrics; 1) the development rate ratio (DRR), 2) development rate variability (DRV), 3) the delay premium ratio (DPR) and 4) delay premium variability (DPV). We calculate these metrics for a sample of nine approved major Australian housing subdivisions (>3,000 dwellings), showing the enormous variation in the pace of new housing lot supply and gains from delay.
The average rate of new housing production is 34% of the maximum rate (DRR) and the minimum rate is just 7% of the maximum (DRV). Total revenue in these sample projects was 82% higher than the counterfactual of setting the price at the start and selling all new lots at that minimum price (the DPR metric). A 204% difference in total revenue was available if all new dwellings were sold at the highest observed price rather than the lowest price over the project life (the DPV metric).
Census
The latest census data for Australia and the United Kingdom both happened to be released this week.
Here’s my main comment on housing supply.
Here’s Ian Mulheirn’s comment on the UK data
Ian Mulheirn @ianmulheirn
In 2016 government projected there would be 24.4m households in England by 2021 In 2020 they projected 23.7m by 2021 #census2021 today says there were actually 23.4m housholds *1 million* fewer housholds than anticipated. Some policy-based evidence making over the past decade? https://t.co/77QLBmtm0WClearly, there is more to the story of housing prices than supply.
I just can’t believe we have so many homeless people in a so called developed country. We pay 3 tiers of paid bloggers to blog about their job and literally walk past the issue of people not having a place to call home. How do these so called politicians sleep?any way. Gympie did have 2449 vacant homes in 2016 down to 1760. 2 houses falling down within 500 metres of each other. Then in area near mums place there is another 2 homes nearly back to bakc but 2 streets between that are vacant. One is falling down in mums street and the other seems to not be as bad. We picked up a free cupboard from that has at least 2 years ago when tenants moved out and I have not seen anyone in it since.
Excellent. Very thought-provoking articles.
Paul Kauffman FAIM FASA