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Stupid criticisms of indifferent government
Russell Degnan

Is it really possible housing developers don't understand the first thing about the housing market? Does the IPA have so little self-respect that it is willing to succumb to pitiful conspiracy theories to justify opposing a Labor policy?

Given the IPA is a body supposedly in favour of 'user-pays' and supposedly quite knowledgable about economics, surely charging for the limited as well as undesirable parking in public spaces, thereby discouraging a non recreational use of the land, and providing a revenue stream to maintain and improve the facilities would be a positive thing. Instead Alan Moran ties himself in knots trying to explain why its a political decision to help their union mates by attacking car drivers. It is bad enough when politicians engage in this sort of unsophisticated fear-mongering; we don't need think tanks to join in.


But what do we make of the developers? The complaint is an $8000 levy, a mere drop in the ocean when you consider the public infrastructure costs it will supposedly cover. On the other hand they are all in favour of more development land on the urban fringe, even if the planners (who can hardly have not seen it coming) are not happy. The arguments on both issues are that housing affordability will be affected (downwards) by the levy, and (upwards) by the availability of land. But did they bother to read the Productivity Commission report on affordability? Like the part that said:

"The Productivity Commission report finds that fluctuations in prices and affordability are inherent features of housing markets and that there is limited scope for governments to improve affordability for first (and other) home buyers in the short term."

The reality is that most home-buyers mortage themselves to the hilt and prices reflect what they are able to lend and repay. In the short term, these measures will affect developers' profits and nothing else.

Over the longer term, both will affect affordability on the margins: the levy by making more affordable land making smaller less profitable; the change in boundaries by increasing development opportunities and the supply of land. But neither is a good, nor a bad, idea on afforadbilty grounds. They are good or bad ideas because of the other (substantially larger) cost of public infrastructure in new developments. And presumably, because if you are going to create a plan for urban development, it is worthwhile pursuing it.

Planning 17th November, 2005 18:13:12   [#] 

Comments

Why are young people buying homes anyway?
Someone commented last night at a Young Planners function that people are buying homes at a younger age than they do in other parts of the world (particularly in big cities like London and New York).

What's wrong with renting? What's wrong with inner city apartments? What's wrong with living with your parents for a few more years? What's wrong with putting all your stuff in storage and travelling the world?

Somehow young people are expected to buy property as soon as they couple up, have a kid or just in general and this places enormous demands on housing - particularly in cheaper areas.
Aaron  18th November, 2005 13:44:23  

Nothing, really...
I think two reasons: the sense of security it gives -- even if it can be a little bit illusory; and Australia's particularly, but anglo countries generally, culture of home ownership. I don't think there is anything inherently wrong with that, and the biggest factor in Australia's high home ownership rates is probably that property is basically cheap here (especially compared to London or New York).

Having said that, economically it is not necessarily a good thing. Money lent by banks into houses doesn't get invested in business and in some ways (not all) that would be better for the economy/jobs etc.

Renters and owners would benefit from more diversity in the renting/buying model. At the moment it is either a short-term lease of buying. Europe generally has quite poor and expensive housing stock so take this with a grain of salt; however, they also have long-term (10 year) leases, and options to buy a lease on a house (so it is effectively yours), but not the house itself, leaving you to pay a smaller rent to the nominal owner. House prices are quite volatile here though, and there is a lot of speculation on short-term price increases that is not conducive to getting in tennants on longer leases.
Russ  19th November, 2005 00:39:57  

Humulus Lupulus Grosso
Frankly, I think a good IPA is the solution to most of the problems both here and abroad. Hops has been shown to be good for the heart and I'm certain they will be shown to be healthy for the mind as well. And what better way to augment hops content than via a good sturdy IPA?
P Smith  19th November, 2005 10:03:15  

Stupid criticisms of indifferent government
Aaron, the social trends you suggest as common sense (eg staying at home longer and/or renting) do seem to be happening now.

Go back 30 years and many 20 year olds had already left home, got a job and could even be married. Now, with more doing uni education and more liberal parental attitudes towards sex, they're staying home longer.

The average age of first homebuyers now is older than 20 - 30 years ago, with affordability, longer education, later marriage and even the dual income household being influencing factors.

There also seems to have been a trend towards inner city living, and because rental yields are so low, renting is much cheaper than buying at the moment. Because rental yields are typically higher in outer suburbs and country areas, renting in the inner city is attractive.

Despite the First Homebuyers Grant (which only pushes up prices IMHO) and the CGT exemption, the tax system makes renting + buying an investment property or two much cheaper than buying your own home to live in.

Peter  3rd December, 2005 19:04:18  

Stupid criticisms of indifferent government
Russell, the very worst thing that can happen to a think tank is for a government to steal all their policies.

This has happened to the IPA since the 1980s. Once the IR legislation goes through the IPA will have run out of hard issues to campaign on.

Hence all they can whinge about is cultural issues, the ABC, union mates and the evils of urban planning. On the latter the temptation to regurgitate stuff from Wendell Cox, etc will be too much to miss!
Peter  3rd December, 2005 19:11:27  

Some comments
Peter, the age of leaving home hasn't shifted as much as most people suppose. It rose a couple of years during the 70s and 80s and has dropped since the early 90s. The ABS has stuff on this but I am not able to find it right now. The age of marriage and first child has shifted around 7-8 years since then however.

What this means, is that there is now a substantial number of young singles living in rental housing before they have children. This has meant a few things: one, it has made the market for investment housing more profitable and is probably a major reason for the long running housing boom; two, it has meant that there are people that don't want a suburban house for their kids and is the primary reason the inner city grew more popular over that period. As yet there is little evidence of families doing anything other than what they always have: moving it the outer suburbs. I suspect it will change but having studied it for 6 months the evidence is sketchy at best.

Re: the IPA. No excuses. Even where the government has taken up their policies they have often been poorly implemented. If you are a policy group you should support and promote good policy regardless.
Russ  3rd December, 2005 22:34:51  


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