Urban land and the creation of housing shortages

 NSW has “released” land sufficient for 6,600 new houses.  The Premier claims that there is a building boom underway in Western Sydney and is looking to extend the first home buyers grant to new properties worth less than $750,000.  The data about a boom tells a different story

nsw new housing approvals

Talk of a boom is decidedly relative.  A recent upsurge means house building is running at only two thirds its level in the 1980s.  The population has grown considerably since then and demand for housing even more so given the costrrained supply forced upon potential buyers that successive NSW governments have opted for. 

Moreover, closely related to the lack of buyers is the price of housing in western Sydney.  At a minimum of $500,000 and usually much more prices are massively inflated by the land shortage which is a matter solely within the power of the government to repair. 

Land on the periphery of Sydney would sell at under $100,000 per serviced block if the government planners allowed sufficient land to be built upon.  Instead it goes for at least $350,000. The Premier, in issuing such self-congratulatory statements,  is surely aware of this.  But instead of policies that would reduce house prices by at least $150,000 and probably $250,000 he offers a palliative of a $15,000 subsidy to selected new buyers

Perhaps, anxious to protect existing house owners, governments hide behind notions that there is a genuine shortage of land or that the infrastructure would be too costly or even that “urban sprawl” is a problem. None of these can be supported by the facts.

Meanwhile Australia is among the most expensive housing markets in the world in spite of the ample land on theperiphery of all our major cities

 By the way Victoria is not much better than NSW

 

 

 

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206 Responses to Urban land and the creation of housing shortages

  1. MACK1

    At least Matthew Guy in Victoria is releasing lots of land along the rail corridors outside Melbourne and rezoning Fishermans Bend. He seems to be the only one acting on the supply side.

  2. Crossie

    Liberal premiers used to know that if you want to collect a lot of stamp duty on a certain commodity you facilitate trade in it. Now the idea seems to be that it’s better to get a larger slug from fewer more expensive sales which just depresses the market.

    This may be counter intuitive when you see prices soaring and a well-to-do customers snapping up the available land/houses. Though what were you trying to do in the first place? If the goal is affordable housing for the average family then this policy is designed to do exactly the opposite.

  3. Tel

    A lot of the new developments have been apartment blocks, with room for 10 or more families. Back in the 80′s and 90′s it would have mostly been single family suburban dwellings. Thus, “number of approvals” doesn’t entirely explain the situation.

    Then again, not everyone wants to live jammed in a small apartment.

  4. H B Bear

    Land on the periphery of Sydney would sell at under $100,000 per serviced block if the government planners allowed sufficient land to be built upon. Instead it goes for at least $350,000.The Premier, in issuing such self-congratulatory statements, is surely aware of this.

    I wouldn’t bet on this. There is precious little evidence to suggest Fatty O’Barrel gets it.

  5. Crossie

    Who benefits by the current practice of driving up the price of land? Who owns the land that is released? If it’s private ownership how are they politically connected? Is this an Eddie Obeid kind of thing?

  6. Crossie

    I wouldn’t bet on this. There is precious little evidence to suggest Fatty O’Barrel gets it.

    Barry is gone though Junior Baird is no improvement on him. Makes you nostalgic for Bob Askin.

  7. .

    The fact that most crown land even exists as such is simply absurd. Privatise it now and get rid of the Gillard-Rudd or Beattie-Bligh or Carr-Iemma-Rees-Keneally debt etc as applicable.

  8. Poor Old Rafe

    That is the kind of self-destructive economic irrationality that drives rent controls and all the regulations to protect tenants which limit the supply of housing stock and run down the condition of existing stock. Someone claimed that rent controls in Britain did more damage to the cities after the war than the Germans managed with bombs. And yesterday I was told that in France tenants can’t be evicted during the cold months of the year, so many stop paying rent in winter. Great incentive to invest in rental housing.

  9. Alfonso

    Can’t come up with $700k for a Sydney shoebox? Budget Detroit awaits the canny investor.

  10. Bruce of Newcastle

    I suspect that developer financing is a problem too. There are nearly 1000 lots in my suburb and the adjacent one which are stalled, and have been for years. The developers keep doing a little here and there on them, and we get the latest plans mailed out by the council, only for it all to go quiet again. Then last month the two projects in my suburb, over 50 Ha worth, were put on the market.

    That suggests to me that bankers don’t want to finance developers (having been burnt a few times) and/or the imposts that state and local government apply are so humungous they can’t develop and make a profit at the local house prices.

  11. duncanm

    The government doesn’t want to threaten its own revenue stream.

    Stamp duty difference from $200k to $500k is $15k.

    The irony is, of course, more houses at less cost would actually increase revenue.

  12. Tel

    Budget Detroit awaits the canny investor.

    There’s jobs in Sydney. Something Detroit managed to dispense with.

  13. H B Bear

    Barry is gone though Junior Baird is no improvement on him.

    Ha ha – completely forgot about that. These cardboard cutout Liberals are so forgettable.

  14. James D

    At least Matthew Guy in Victoria is releasing lots of land along the rail corridors outside Melbourne and rezoning Fishermans Bend. He seems to be the only one acting on the supply side.

    LOL. He’s done so well the average price of a new lot on the periphery of Melbourne is only $190,000. And they’re smaller than fucking ever. Meanwhile, on the outskirts of Atlanta and Houston a new lot is $30,000.

    Solving the housing crisis does not take a genius. Governments must remove ALL land-use constraints on undeveloped land.

    Let a farmer sell his 10,000 acre property to developers to build thousands of houses on. Don’t get the government involved at all. They don’t need a role in this.

    Why are new lots smaller than 1/10th of an acre? We have more land per person than any other country in the world. Period.

    I’m interested in Queensland’s planning reform, nobody else seems to be though. They’re going to repeal the Sustainable Planning Act and completely replace it. Hopefully this will lead to a reduction in artificial land scarcity.

    The statists, the planners, the environmentalists, they really don’t like big one-story houses on quarter-acre blocks in quiet, leafy suburban streets. They instead want us to be cooped up in tiny and expensive apartments, much like they were in the USSR. No driving your car to work, gotta use public transport, that’s part of their plan.

    At the end of the day it all comes back to their aim of the destruction of the family. You cannot raise a family in a flat. High house prices are part of the reason our birth rate is so low.

  15. Roger

    Interesting.
    I saw an article recently that pointed out that metropolitan Tokyo had more new dwellings built in a recent year than the whole of England. Different approaches to urban planning were the key, with the Japanese authorities being less restrictive.

  16. .

    It’s not surprising at all though roger.

    The statists, the planners, the environmentalists, they really don’t like big one-story houses on quarter-acre blocks in quiet, leafy suburban streets. They instead want us to be cooped up in tiny and expensive apartments, much like they were in the USSR. No driving your car to work, gotta use public transport, that’s part of their plan.

    At the end of the day it all comes back to their aim of the destruction of the family. You cannot raise a family in a flat. High house prices are part of the reason our birth rate is so low.

    This explains the low birth rate and later marriage.

    The monstrosity of Iron Curtain dwelling architecture is a nightmare to behold.

  17. James D

    The monstrosity of Iron Curtain dwelling architecture is a nightmare to behold.

    But it’s an urban planner’s wet dream.

    Look at that density! So much better than that cruel urban sprawl!

  18. Rabz

    The monstrosity of Iron Curtain dwelling architecture is a nightmare to behold.

    FFS, don’t get me started.

  19. .

    Damn, target missed, reload!

  20. Paul

    “Budget Detroit awaits the canny investor”

    And enjoy all that vibrant diversity helping your investment to lose all that last inconvenient value. Beautiful Detroilet. The Liberia of the North.

  21. “Budget Detroit awaits the canny investor”

    That’s right up there with ‘Renovator’s Delight’, isn’t it.

  22. H B Bear

    The monstrosity of Iron Curtain dwelling architecture is a nightmare to behold.

    City Road Melbourne? Putting the dog in dog boxes.

  23. Johno

    Victoria’s new Green Labor lite government is little better than Victoria’ s previous full strength Green Labor government

    When the Coalition’s Planning Minister, Matthew Guy, released their brand new planning guide for Melbourne it was nothing more than an update on the previous governments planning policy.

    No Minister has been prepared to take on the Greens who run the Planning Department. They are just the bureaucrats mouthpiece.

  24. outsider

    It’s becoming apparent that home affordability is the (often unidentified) root cause of much of the general angst greeting any wind-back in govt largesse, e.g. age pension eligibility. Some pretty serious social problems as well stem from the long-standing housing ballsup – mental health issues, brain drain, retarded family formation rates, kidults failing to mature and staying at home until age 30, too many hours worked generally, and the big one – widening disparities in social advantage – ‘here is your $50k deposit, son, pay me back later’.

    Alan, it would be very interesting to see yourself or Judith do an analysis of the (admittedly broad) set of issues the different tiers of govt would need to tackle to arrest the problem.

    ‘anxious to protect existing house owners’
    Of course it’s very complex and I have no wish to oversimplify, but would this not only apply to those with large recent mortgages, and downsizers? Investors too perhaps, looking for rapid appreciation? If house prices drop at roughly similar rates from top to bottom – led down by reduced new home prices – everyone moving up or moving into the market should benefit.
    Australians need to understand markets need to stay healthy by heading in both directions from time to time, and forget the sacred status of the roof over the head. So much of our debt resides in dwellings, an amazing resource misallocation at all levels. Again, the case must be made by a courageous politician. OK, that’s an oxymoron, maybe leave off the ‘oxy’ too. There must be a limit soon, and you imagine it exercises Glen Stevens thoughts substantially.

    http://news.domain.com.au/domain/real-estate-news/welcome-to-sydneys-new-milliondollar-suburbs-20140124-31e9a.html

    To think people mock the Chinese for building ‘empty’ cities (fast), when they will be moving the equivalent of the population of the US into urban centres in the next ten years.

  25. thefrollickingmole

    Any reform will never happen every tranche of government profits from insane restrictions on land.

    Obeid, made millions at a state level.
    ALP/Lib make hundreds of thousands in developers/union mates donations on projects.
    Local councils are hotbeds of corruption and insanity, regulations selectively enforced and millions to be made or lost on applications.

    Regulation should be almost non-existent, you own it you do what you want with it, if it damages your neighbors then a court will damage your moneybag.

  26. Ivan Denisovich

    Another excellent piece from Alan.

    I suspect that developer financing is a problem too.

    Correct, Bruce.

    the imposts that state and local government apply are so humungous

    Astronomical rises over the past couple of decades, both in paperwork (compliance reports) and associated consultants’ fees and in government charges.

    Why are new lots smaller than 1/10th of an acre?

    Developers used to argue about minimum allowable lot size. Now, developers are having to argue about maximum allowable sizes – if they can be bothered fighting. It seems to me that a consequence of the greening of the whole planning and approval process is that local and state governments are wanting to cram people in on inappropriate sites to avoid releasing more land for development.

  27. Dr.Sir Fred Lenin

    If a government with guts was in power,they could stop all foreign aid and finance to u.n. and other communist causes,and use the money to build public housing to sell to Australian s on low cost loans,,the increase in home ownership would kick the economy along nicely,the repayments could be used to finance infrastrucure,a new approach. ,it would also drive hose prices down,eliminating profiteering and tax evasion.

  28. Combine_Dave

    Nonetheless, the expanded appeal rights, limitations on the ability to impose conditions on development, and clarity in the areas of crediting, offsets and refunds, are likely to result in an overall improvement in the infrastructure decisions made.

    Changes in dev charges Qld.

    http://www.allens.com.au/mobile/page.aspx?page=/pubs/env/foenv14may14.htm

  29. Combine_Dave

    If a government with guts was in power,they could stop all foreign aid and finance to u.n. and other communist causes,and use the money to build public housing to sell to Australian s on low cost loans,,

    How about the gov just release more land and fund the infrastructure needed to support these new dwellings by defunding Terrorism schools in Indonesia foreign aid and the UN.

    That would bring the price down a bit, and any over supply can be quickly fixed with a FIA with either Japan or SKorea (or both).

  30. This is the great sleeper of Australian policy. We have insane housing prices by design. The tragedy is that Australians have no idea how cheap houses could be, and how cheap they are in many other developed nations.
    It’s something the LDP could sink their teeth into, if the Libs aren’t interested in reform.
    There is some interest within the Liberal party in this issue, but not at high levels in various current state administrations.

  31. Also there is a lot of myth-making in the public about the causes of high housing prices.

    Frequently, people will attribute high prices in their locality to growing popularity of the locality, or to rich people from elsewhere moving in, or to Chinese investors.

    The reality is that it’s due to a range of government policies, including land release, developer fees, environmental protections, excessively Byzantine building codes, red tape, green tape, and so on. There is little political will to take on things like green tape, which are a minefield of well-intentioned regulations, each of which on its own has face value justification.

    There are multiple sources and while they can’t all be wound back overnight, a major rollback in even one area – such as land release – would make a big difference. As dot says, there is no good reason for the states to hoard “crown land.”

  32. Kaboom

    Unfortunately, the land price treadmill cannot be interfered with.

    The cost of actually constructing a dwelling has remained fairly constant over the last decade, and it is the price of the underlying land which has raised the valuation of all of the boats, both greenfield and existing.

    Reducing the price of “land” in greenfield developments will have a serious flow-on effect. As Alan Moran says:

    Land on the periphery of Sydney would sell at under $100,000 per serviced block if the government planners allowed sufficient land to be built upon. Instead it goes for at least $350,000. The Premier, in issuing such self-congratulatory statements, is surely aware of this. But instead of policies that would reduce house prices by at least $150,000 and probably $250,000 he offers a palliative of a $15,000 subsidy to selected new buyers

    Basically, if greenfield residential development prices were reduced by $150,000 or $250,000, this would devalue all residential housing, old and new, across the board, by a similar amount.

    I personally think that this would be a good thing, but just ask those 1.7 million Australians who have entered into negative gearing arrangements, who will be suddenly underwater, and scrabbling to meet their favourite bank’s new equity requirements (i.e. property margin calls).

    Hence, my belief that the land price treadmill will ratchet upwards and upwards, until it breaks. There will be no help whatsoever from .gov, of whatever political colour.

    It will break. Detroit, here we come.

  33. Obeid, made millions at a state level.

    while the government hoards land, and releases to a hungry market in small tantalising titbits, there will be a propensity for corruption.

  34. I personally think that this would be a good thing, but just ask those 1.7 million Australians who have entered into negative gearing arrangements, who will be suddenly underwater, and scrabbling to meet their favourite bank’s new equity requirements (i.e. property margin calls).

    Flooding the market would create problems. however, if you released enough so that land valuations went into a slow-long term decline …. like a gentle downhill slope over a few decades, then people would get used to it.

    not everyone would like it, but it wouldn’t be a headline grabber like a government induced crash.

  35. Kingsley

    Be interesting to hear Bob Day from Family First views on this issue.

  36. It will break. Detroit, here we come.

    What would a ‘break’ look like?
    The difference with Detroit was that it was one city in a large distributed nation, and people could easily move out.

  37. MemoryVault

    Hence, my belief that the land price treadmill will ratchet upwards and upwards, until it breaks. There will be no help whatsoever from .gov, of whatever political colour.

    It will break. Detroit, here we come.

    +infinity

  38. MemoryVault

    not everyone would like it, but it wouldn’t be a headline grabber like a government induced crash.

    It would be interesting to now just how much of Australia’s $1.6 trillion in super funds is tied up in property or in investments that have a property component in their value.

  39. Kaboom

    AussieP, this is not something that can be scaled down ” like a gentle downhill slope over a few decades.

    It needs to have permanency of legislative effort, and a “gentle slope” doesn’t cut the mustard.

    The effects will be immediate, and potentially disastrous for those who are negatively gearing rental properties.

    Hence, my initial submission that “the land price treadmill cannot be interfered with”.

    What will “the break” look like? I don’t know, to be honest.

    Prices going up and up and up with no underlying reason apart from regulatory impact upon property developments, fully supported by property developers (protecting their current land banks and financing proposals), local governments (protecting their rates base on valuations), consultants (protecting their ever increasing role in the development application process), real estate industry types (agents, lawyers, state government stamp duty, protecting the increased base for calculating commissions, fees, and taxation), and cheered on by the 1.7 million or more owners of negatively geared property, whose only means of making a quid is if there is a capital gain on the underlying property.

    The “break” is going to be significant, simply because property values (and concomitant rental values) cannot keep increasing substantially in excess of the median wages in any area.

    The “break” is going to be ugly, unless urgent changes are put in place immediately.

  40. Wozzup

    In every capital in Australia there is an artificial land shortage created by government policy which has artificially inflated the cost of land to a point where its virtually unaffordable to many families. Labor’s support for such policies is particularly strange given the impact on ordinary working Australians. Published figures show that in Adelaide for example (these are approximate because I do not have the dates/ figures in front of me right now) between 1971 and 2007 land prices in the capital rose something like 69 items. This is largely due to restricted land releases, and the front loading of land with infrastructure costs. Higher even than Sydney. This is an example of regulation gone mad. The experience of less regulated markets like Dallas, Texas shows that housing cost is substantially less and does not suffer the same boom must cycle as other cities in the USA. Would the same be the case in Australia? Probably but its hard to know as all capital cities are regulated in the same way so we cannot point to local examples but if you are an economist you would have to say yes! How is it that successive governments can get away with regulating land releases thereby driving up prices artificially, then front load land with infrastructure costs driving it up more then hand out money to first home buyers to help with “affordability” but in reality simply driving up land prices even more through the magic of supply and demand. Are our politicians so dumb that they cannot see this. Possibly yes. or is it the influence of the real estate and development industry who are the real beneficiaries of all of this combined with the desire of governments to look good to the electorate (both by being able to hand out $ to first home buyers and by maintaining policies that keep prices artificially high thereby buying the votes of existing home owners.) I will leave you to guess but I know where my money goes.

    On top of this governments are regulating house construction which increases their costs while Australia has one of the least productive and highest cost construction industry in the world. Is it any wonder that housing affordability is a major problem with policy failures in every aspect of this question.

  41. Infidel Tiger

    Labor’s support for such policies is particularly strange given the impact on ordinary working Australians.

    Labor hates working Australians with a passion.

    Their constituency is the public service and disability pensioners – neither of which groups work at all.

  42. AussieP, this is not something that can be scaled down ” like a gentle downhill slope over a few decades.

    Property should go up and down. It’s supposed to be cyclical. That’s the normal state of affairs.
    Anyway in terms of backlash, property investors aren’t an organised lobby group in the way that, say, environmentalists or unionists are.

  43. Kaboom

    AussieP:

    Anyway in terms of backlash, property investors aren’t an organised lobby group in the way that, say, environmentalists or unionists are.

    Sure, but what about the Banks, who would not like to see default after default of these poor, unfortunate negative gearers?

    I would put the Banks right up there with your postulated environmentalists and unionists.

  44. alan moran

    There is clearly a perfect storm in creating the high prices: government concern over their own revenues, green hatred of development beyond some inner suburban line, ignoramuses in planning departments who think it costs more to build infrastructure on the fringe, and politicians concerned about those people who have newly bought and who may be under water in the event of a ~$200,000 fall in house prices.

    There is also an inertia. People like Mathew Guy might well wish to see more land zoned but the morasse of regualtory arrangemertns and appeals is so considerable that they don’t know how to do it (and the incumbent advisers are not about to tell them).

    I am tempted to think it cannot last but then again we have been over-priced on the fringe for at least 20 years now.

  45. You’re catastrophising unnecessarily.
    This helpless attitude of “oh no, we can’t fix the problem because people would get angry” is the sort of lily-livered thinking that for example, has left the RET, FWA, NDIS intact.

    First identify the problem; (done). Second, identify the solution. Third, figure out how to make the solution happen. Finally, solve the political obstacles.

    Stop running around saying it can’t be done. If everyone keeps saying that then there will be no political will to change it, because the common wisdom will be that it is politically “too hard.” Our fearless leaders don’t need much of an excuse to hide in the cupboard, and they ascribe to the motto that “politics is the art of the possible” (where ‘possible’ means ‘expedient’).

  46. That last comment was in reference to kaboom, by the way, not alan.

  47. I am tempted to think it cannot last but then again we have been over-priced on the fringe for at least 20 years now.

    It can last.

    People who are hoping for some kind of tipping point that will collapse the system and force political change are merely engaging in wishful thinking.

    The ACT is the test lab for this, where regulation has increased land prices much more than the rest of the country. In short, based on what we see in the ACT, there will simply be a slow increase in misery and hardship, and and increase the ‘working poor’ (who will no doubt require increasing handouts to help them get by).

  48. Kaboom

    AuusieP:

    It can last.
    People who are hoping for some kind of tipping point that will collapse the system and force political change are merely engaging in wishful thinking.

    Here is your answer, in one word:

    Detroit.

  49. Kaboom

    Indeed, Alan is quite correct when he says:

    I am tempted to think it cannot last but then again we have been over-priced on the fringe for at least 20 years now.

    Investor stupidity can go on for far longer than one can stay solvent. {Not my original thought, but paraphrasing market observations made over centuries}

  50. Combine_Dave

    Detroit

    I was unaware that detriot was characterised by strong economic growth (relative to other developed nation’s cities), high levels of immigration and demand for housing and massive governmnet burdens, regs and taxes to prevent the easy development of residential land…

  51. Here is your answer, in one word:

    Detroit.

    Detroit’s decline has nothing to do with excessive land prices.
    Furthermore the decline in Detroit is manifested principally by people moving away to other cities, something Australians can’t do when the problem is nationwide.

  52. Kaboom

    “Detroit” is not meant to be a case-study of societal economics – I was merely using it as an illustration of what I termed “the break”, and its consequences.

    Sorry to have confused you all.

  53. Tel

    Furthermore the decline in Detroit is manifested principally by people moving away to other cities, something Australians can’t do when the problem is nationwide.

    I completely disagree, the problem in Detroit happened because business moved away, after that there were no jobs.

    Australians could easily move from Sydney to Dubbo where prices are less than half, and the houses and land are huge… but, errr, not many jobs.

  54. Myrddin Seren

    In every capital in Australia there is an artificial land shortage created by government policy which has artificially inflated the cost of land to a point where its virtually unaffordable to many families.

    and

    Australians could easily move from Sydney to Dubbo where prices are less than half, and the houses and land are huge… but, errr, not many jobs.

    Anecdote O’clock ( again ).

    On our recent junket across north-west Australia, we were advised about housing costs in three locales:

    Broome, Kununurra and Darwin.

    Average house price in Broome – $650,000. Folk in lower paying jobs in service and tourism seeing their income eaten up in accommodation, plus the higher costs for life’s conveniences in remote locations ( eg petrol was $1.80/litre + ).

    I didn’t notice any shortages of land per se as we flew in to Broome. However, capacity to access that land will be constrained by politics, native title etc.

    Kununurra = same deal as Broome.

    Darwin – lots and lots of FIFOs working on the LNG plant and others capital works have driven up costs. Gas plant will be finished in due course and the Darwin skyline surprisingly busy with cranes and high rise developments, so presumably some equilibrium in the fullness of time.

    To the main problems of government favouring vested interests PLUS the bananas ( build absolutely nothing anywhere near anything ) in community activism and planning departments, the construction industry’s ultimate customers ( us ) have imposed upon them the hidden tax of corruption.

    Australia is an insanely expensive country given its bounteous resources and I for one fear for our most of kids’ futures ( aspiring members of Young Labor embarking upon the career trajectories of icons like Richardson, Obeid and Williamson will of course be fine and form the new Bourbons in due course ).

  55. James B

    Flooding the market would create problems. however, if you released enough so that land valuations went into a slow-long term decline …. like a gentle downhill slope over a few decades, then people would get used to it.

    There’s so much confusion over what causes rises and falls in house prices that I doubt many people would realise a new planning law was the cause of declining house prices (they might fall 10% a year as new houses could finally be built fast enough to keep up with demand). House prices have tripled over the last 20 years and there’s only a few people who have any clue why. If you ask the average dumb fuck they’ll tell you something about Chinese investors or negative gearing.

    There are a number of solutions here, none of them have to be announced in a particularly grand fashion. The easiest thing to do is to abolish the role of all state government planning departments, so that only municipal (local government) laws have sway over how new land is re-zoned and released, and how development proceeds.

    Then you re-write the local government act and base it on a successful one like that of Texas. Make a Local Government Appeals Tribunal that has the power to over-ride any local government decision on matters of re-zoning and development in non-established areas. Ban infrastructure levies, and set strict time limits on matters of approvals and application processing. It isn’t difficult.

  56. Australians could easily move from Sydney to Dubbo where prices are less than half, and the houses and land are huge… but, errr, not many jobs.

    I think you need to pick a different example.

    Dubbo, like several other regional centres, is booming. Houses are over $300k in Dubbo, growing at 5% p/y, and rent is about $300 a week.
    Cheaper than Sydney, sure, but not exactly “cheap.”
    Unemployment is below the state average.

  57. James B

    The funniest thing is the planners justifying their “urban consolidation” and “smart growth” laws by telling us more people are living in apartments.

    Well, if it costs $750,000 to get a detached house and $400,000 to get a crummy apartment, people will pick what they can afford.

    But it’s a vicious cycle. They use the evidence of their fuckups to continue with the fuckups.

  58. House prices have tripled over the last 20 years and there’s only a few people who have any clue why. If you ask the average dumb fuck they’ll tell you something about Chinese investors or negative gearing.

    This is a good point. People don’t understand that government regulations have caused the price increase. Therefore we should expect that, similarly, they wouldn’t understand that any decline in prices was similarly influenced by policies and regulations.

    We already know that when it comes to real estate, people don’t blame government even when government is the culprit.

  59. James B

    I think you need to pick a different example.

    There aren’t any. Developing new land is difficult and expensive everywhere.

    There’s no amount of cheap land anywhere. Land is slightly cheaper in regional areas because nobody fucking wants to live there. If they had growing populations the price of land in those areas would be just as high as it is around capital cities, because we have a fundamental problem of our laws literally stopping housing construction from responding to demand in any appropriate way.

  60. James B

    This is a good point. People don’t understand that government regulations have caused the price increase. Therefore we should expect that, similarly, they wouldn’t understand that any decline in prices was similarly influenced by policies and regulations.

    We already know that when it comes to real estate, people don’t blame government even when government is the culprit.

    Exactly. Global economic uncertainty, a tough budget, etc, are all good scapegoats for falling house prices anyway.

    I’m really looking forward to the Newman government’s new planning legislation. But if this doesn’t come through and fix things in a big way I honestly give up on this country. If you read the comments on the Guardian article Alan linked, these leftist statists are angry that a tiny amount of new land in a city with some of the most constrained land supply in the entire world was released for development.

  61. Snoopy

    Prices going up and up and up with no underlying reason apart from …………………. local governments (protecting their rates base on valuations),

    Land valuation doesn’t directly affect the amount of rates any one landholder pays. Valuations simply affect the relativity of rates paid for different blocks of land in a council area.

  62. MemoryVault

    James B
    #1340135, posted on June 9, 2014 at 4:37 pm

    The easiest thing to do is to abolish the role of all state government planning departments, so that only municipal (local government) laws have sway over how new land is re-zoned and released, and how development proceeds.

    Therein lies both your biggest stumbling block, and possibly the simplest solution.

    Councils just love rising land prices because it means an automatic increase in rates, which are levied as a percentage of land value. I doubt there is a local council in OZ today, that wouldn’t be in deep doo doo if their total take in rates and taxes remained stagnant for any length of time. Perpetual growth in income seems to be a necessary “given” at all levels of business today.

    Opening new land would also generate new rates and taxes, but would mean local councils would actually have to do shit – increased services, more rubbish collection, more parks and roadside verges to mow and so on. Far easier to simply strangle the supply of land and sit back and wait for land values – and hence rates and taxes – to increase, and use the extra funds to employ more “Environmental Officers” and so on.

    However, if an incoming government (state or federal) were to somehow impose a three year freeze on the land values** used by councils to levy rates, then the only way for the councils to grow their income would be by facilitating the release of new land for housing. I think we would have a land boom, and hence, housing boom.

    Mind you, I don’t see this ever happening – there are too many vested interests in maintaining the status quo. Still, I can dream.

    ** I am not suggesting actually freezing land prices, which, as always, should be determined by the market. Just freezing the nominal value used by the councils, and the percentage of that value that they currently use to calculate rates and taxes.

  63. David

    The young committed urban planner’s Shangrila is “Medium Density” living. Medium Density Living is New Speak for we are going to cram as many one ore two bedroom units into your once leafy and liveable suburb as we can get the wankers in council to agree with and completely stuff up the area you chose to live in because of what it was.

    We then have the obligatory community consultancy meetings [got to involve the community] so that the same YCUP [see above] , a spiv from the developer and a Council Planning Officer get up and tell us how wonderful it will all be for us so just shut up and go away.

    They were ambushed at one we had in SE Melbourne because among the irritable old buggers in the audience were two engineers, an old urban planner who actually taught the subject part time at one of the few reputable institutions, and a few bods learned in town planning issues. Did us bugger all good in the end as VCAT upheld the shonky council decision and we now have the lovely units and the attached problems of traffic, pedestrian safety, et al.

    The only bright side was we sent the YCUP away with a newly reamed second fundamental justly acquired for his arrogance in thinking that because most of us were well over fifty we were dumb.

  64. Ren Hoek

    Culture is the determining factor.
    Morrison is doing a sterling job.
    Age is no barrier to intellect, the same as education.

  65. Kaboom

    Ren, either keep on point, or fuck off. Simples, really…

  66. Ren Hoek

    Simple for some…
    Back later.

  67. Tel

    Houses are over $300k in Dubbo, growing at 5% p/y, and rent is about $300 a week.

    Like I said, about half the price of equivalent in Sydney. Less than half price, if you compare to a “good” area in Sydney where travel to & from work is less than one hour each way.

  68. Ren Hoek

    Link not working Alan.
    Please fix with diagrams.

  69. Tel

    Average house price in Broome – $650,000. Folk in lower paying jobs in service and tourism seeing their income eaten up in accommodation, plus the higher costs for life’s conveniences in remote locations ( eg petrol was $1.80/litre + ).

    But never the less people go there, because they can get jobs. That’s the whole point. As long as tourism remains active and European backpackers see Australia as a good place to get laid, Broom cannot possibly go the way of Detroit.

  70. motherhubbard'sdog

    6600 homes would be about six weeks worth of demand in NSW.

    Big deal.

  71. Joe Goodacre

    Thanks Alan for writing this – it doesn’t get said often enough and my belief is that if you had to pick the battleground on which policies are most punishing to families and likely to result in long term growth in government, restricting land use would be right up there.

    Not sure that Victoria is as bad though… this is only circumstantial but I have a friend whose mum is looking to buy and Victoria appears substantially cheaper (hundreds of thousands) for an equivalent sized dwelling the same distance from the CBD.

  72. Rabz

    it would also drive house prices down, eliminating profiteering and tax evasion.

    So Freddles – you really are a frigging marxist.

    And FFS, it’s tax avoidance – not tax evasion. Negative gearing is not illegal (yet) despite the best efforts of your socialist ilk. :x

  73. Rabz

    That there is a housing ‘shortage’ in a country this size is an obscenity.

    Yet another reason why politicians should wake up every morning feeling a hell of a lot more grateful than the rest of the plundered dolts living here.

  74. Kaboom

    Rabz, I much prefer the term “tax minimisation”, as opposed to “tax avoidance”.

    You see, “tax avoidance” is just as illegal as “tax evasion”.

    On the other hand, “tax minimisation” has the cachet of being legal. Until it is not, of course…

  75. MemoryVault

    On the other hand, “tax minimisation” has the cachet of being legal. Until it is not, of course…

    I have found a foolproof way to”minimise” personal income tax to zero.
    I stopped working.

  76. Kaboom

    Memory, regrettably there are things like Capital Gains Tax, and similar indirect taxes like the GST that manage to fuck us over, just to make certain…

    Not paying income tax by choice is not the answer. Is there an answer?

  77. .

    James B
    #1340149, posted on June 9, 2014 at 4:49 pm

    But it’s a vicious cycle. They use the evidence of their fuckups to continue with the fuckups.

    The department of planning is much like fiscal planners (Keynesians) in Treasury.

  78. Rabz

    You see, “tax avoidance” is just as illegal as “tax evasion”.

    No it is not, you appalling ignoramus. Avoidance is legal, evasion is illegal.

  79. nerblnob

    Average house price in Broome – $650,000. Folk in lower paying jobs in service and tourism seeing their income eaten up in accommodation, plus the higher costs for life’s conveniences in remote locations ( eg petrol was $1.80/litre + ).

    But never the less people go there, because they can get jobs. That’s the whole point. As long as tourism remains active

    I suspect the growth in Broome’s not so much about tourism now. It’s the new supply base for offshore developments in the Browse basin. FIFO and support for the rigs. And the future Korean-built FLNG vessels that have taken the place of shore-based LNG plants that the Greenies blocked.

  80. Kaboom

    Rabz, I suspect that you should confer with Counsel regarding tax “avoidance”.

    I shall not (at this juncture) take umbrance at your unwarranted and ill-informed slur.

    You may man up and apologise in due course, or you may choose not to.

    That is all.

  81. Rabz

    kabs – I’ve been following the tax debate since the early eighties – the difference has always been clear.

    Avoidance is legal, evasion is illegal.

    No slippery lawyer kiddie fiddler, making it up as they go along, is going to change that understanding.

    :x

  82. Rabz

    I shall not (at this juncture) take umbrance at your unwarranted and ill-informed slur.

    Wonderful grammar and usage, Good Sir.

  83. johanna

    Umbrance? Is Julia Gillard commenting here?

  84. MemoryVault

    No it is not, you appalling ignoramus. Avoidance is legal, evasion is illegal.

    Sorry Rabz, but it depends on the day of the week.

  85. Kaboom

    Rabz, please go back to your roundel.

    OK, umbrance, umbrage – you get my drift. Allah only knows how that happened there…

    The difference has always been clear, has it?

    I humbly refer your Lordship to Part IVA of the ITA Act (1936), introduced as the “anti-avoidance” provisions in 1981 under the Income Tax Laws Amendment Act, and at the same time the Acts Interpretation Act was amended by the introduction of s.15AA, which ameliorated the overly literal interpretation of Commonwealth legislation, which had supposedly contributed to the escalation of tax avoidance and evasion schemes.

    As a result, when interpreting ambiguous provisions, the Courts could now draw upon the “purpose and intention” of the legislation, and so cut down the opportunities for those seeking to exploit the tax system by appealing to a literal interpretation of the legislation.

    Believe me, FCT v Peabody (1994) 28 ATR 344 is not going to save your soul.

    Nor mine, might I add :(

  86. Umbrance? Is Julia Gillard commenting here?

    ouch! :-)

  87. Kaboom

    OK, Aussiepundit, I slipped up whilst typing. Mea culpa.

    You, I see, have not sensibly responded to the “break” issue postulated above. Do you seriously believe that property prices in Australia will continue to inexorably climb? Are you a real estate agent in real life?

  88. MemoryVault

    I humbly refer your Lordship to Part IVA of the ITA Act (1936), introduced as the “anti-avoidance” provisions in 1981 under the Income Tax Laws Amendment Act,

    As I said, it depends on the day of the week.

  89. You, I see, have not sensibly responded to the “break” issue postulated above. Do you seriously believe that property prices in Australia will continue to inexorably climb? Are you a real estate agent in real life?

    I think some people hope for a crash or imposion as a way of resetting the market and forcing political change.

    But bad policies can run for a long time without spectacular failure.

    The alternative is just a continual slow constricting of Australian households, increasing poverty and hardship for working families, and an increasing class divide between those who own property and those who do not.

    (as much as I hate the word ‘inequality’, a property divide- caused by excessive house prices – might be a genuine case of it)

  90. OK, Aussiepundit, I slipped up whilst typing. Mea culpa.

    I didn’t care about that. I just thought johanna’s quip about Julia Gillard was funny.

  91. johanna

    It was a good-humoured joke – don’t take it to heart.

    And the predictions of the Great Crash in Australian real-estate markets have taken on the character of the sighting of the Loch Ness Monster. They want it to happen, desperately. It satisfies their desire for retribution against anonymous forces and people they don’t like.

    However, it would be catastrophic in effect, and no-one who is not poisoned by envy would welcome it. The “gradual downslope” – but not too gradual – is definitely the way to go.

    I am one of the beneficiaries of the price boom of the last 10 years. But it is no use to me, as if I want to downsize, the transaction costs and cost of comparable (smaller) housing in a tightly controlled market make it a not very attractive proposition.

    The advantage of the “downslope” approach is that it would open up a lot more options for buyers without trashing the value of most people’s only significant asset.

  92. Kaboom

    OK, fair enough. It was in fact funny :)

    I am seriously praying that there wont be a crash (or anything near it!), but what I was trying to get across was this:

    (a) Green-tape and red-tape, and all sorts of confused and confounded local Council regulations, by-laws, and petty restrictions (which multiply like cancerous lesions) add cost after cost after cost to anyone who develops city-fringe property;
    (b) If all this bullshit was dispensed with, property values (as Alan has set forth in his article) would necessarily plummet for greenfield developments;
    (c.) Kaboom’s simple hypothesis is that this would occasion a concomitant reduction in property values, for both new and old houses, area-wide; and
    (d) A reduction in property values would not be appreciated at all by:
    (1) Bankers (2) Real Estate Agents (3) Lawyers, Consultants et al (4) Local Councils who rely upon rates (5) State Governments who rely upon Stamp Duty, and finally (6) Negative-gearers (let’s call them “Gearies”). There are 1.7 million Gearies in Australia, as at 2010 I believe. Probably many more today.

    Therefore, my hypothesis was that with all of these confounding forces staged against any reduction of property values, and ergo against any change in the Green-tape/red-tape bullshit, we will have a continuation of the status quo.

    This is set in concrete. If you disagree with me, please let me know.

    It is not a matter of catastrophising – it is reality. The entire system is going to continue as is, until it …. breaks.

  93. brc

    That suggests to me that bankers don’t want to finance developers (having been burnt a few times) and/or the imposts that state and local government apply are so humungous they can’t develop and make a profit at the local house prices.

    I know some small-time developers that have the cash and the open lines of credit to make something whenever they wish. They don’t because the councils make it so difficult you eventually tire of beating your head against the wall, and people can find some other sadist to build them a dwelling while they spend their time leisurely traveling and pursuing hobbies. I personally know some of the land banks they have built up – nothing massive but they could easily add to the supply of housing, create some work and pocket some profit. But they don’t, because council.

    I also know someone who works as a project manager for a major residential land developer. He tells me tales of petty councillors who nod and work with them and then pull the rug publicly on them in backstabs – supporting a project while in planning, then dumping on them once it is announced. They do this to collect votes from Nimbus and to pretend they are powerful little somebodies.
    The national level developers only put cash into the projects when it is all green lights. Guys can work on a project for a year or more, think it is all coming together, then either have the rug pulled, or have more onerous conditions added on. If you think this drives up the cost of development then you would be correct.

    I used to have a pretty dim view of the big land developers but I now see they are struggling with red tape and government problems just like the rest. They don’t really land bank to drive up prices – the real problem is actually getting land they can take to market, and just like everywhere else, little socialists have been introduced into their companies, so all their work comes with a side of diversity reports and social impact analysis. If you think this drives up the cost of development you’d be right.

    There will be no solutions until there is action on reducing the difficulty on getting land to market. This is unlikely to happen, as only dusty corners of the internet like this one are even talking about the true cause of the problem – and a huge chunk of the population doesn’t even see it is a problem. But there are already strong social problems developing – you just can’t escape high house prices no matter where you flee – and many, many service businesses have high prices because the real estate prices are a major input cost.

    We (rightfully) had a massive argument about intentionally increasing the cost of energy through taxation – because people correct pointed out it was a major input cost. But the increases in property prices and associated rents tear much more cash out of most families and businesses than the carbon tax ever did, but nobody seems to connect the dots.

    I actually have come around to the idea of higher property taxes (to state gov’t, not rates) and abolition of stamp duties. Stamp duty is cyclical on the property boom/bust cycle, and is just property tax paid up-front (most people end up borrowing it anyway). It encourages sitting and grinding away and making the property market even more illiquid. A more liquid property market is more likely to swing up and down and move faster. Add to that more land releases and you could see some relief.

    I mean, if you’re not clearing at least 80-100k in income and already in a property of some sort, I think you’re pretty much screwed in terms of getting your own, anywhere. A home owning society is a better one, and we need a gradual stagnation and decline in prices to make things more affordable over time.

    This is the one thing that Australia should lead the world in, and yet, here we are, absolutely screwing it up as usual.

  94. .

    Consultants wouldn’t give a shit.

    Someone would have to justify bullshit to a source of finance.

    That’s where step in. With excuses.

    More development means there are more excuses to be made for shit business ideas.

  95. brc

    Oh, and I agree, the status quo has locked this thing in. I see no way that it can happen. Particularly given how much the banks would suffer if they had to start writing down their property loan portfolios. It’s pretty much all they do these days.

  96. Joe Goodacre

    Kaboom
    #1340820, posted on June 9, 2014 at 10:01 pm ,

    My take as well.

    Another three factors that I think supports the contention that the status quo will continue are:

    a) that inflation of M3 that is isolated in land property values doesn’t make people feel poorer – they actually feel wealthier because their home and investment property look like they’re worth more on paper.

    b) banks when finding the funds to fund the credit expansion go searching of foreign equity markets which increases the demand for the Australian dollar (resulting in lower prices for goods that are other indicators of standard of living – e.g. cars etc); and

    c) foreign investors also look to put capital into property development – increases demand for Australian dollar with coresponding wealth effect and creates jobs building new supply.

    When demand slows and prices should fall, people are more likely to hold on to their property investments due to the transaction costs which gives demand a chance to catch back up with immigration and new household creation.

    All in all, it’s hard to see a Steve Keen-like scenario eventuating.

  97. Joe Goodacre

    I mean foreign bond, not foreign equity markets above.

  98. johanna

    brc, excellent (longer) post above.

    People don’t realise how all the incremental policies – like the stupid “energy ratings” (which are totally bogus) ratchet up prices for no real gain whatsoever, except to their parasitic promoters and their pals. Meanwhile, the same claque try to push us, with more land than we could fill in 50 generations, into ever and ever smaller living spaces.

    It is almost surreal for me to remember back to the 1960s in Sydney when my (migrant) parents and their friends lived in “temporary dwellings”, garages and caravans on their land while building their houses. Nowadays, that is not allowed. No way would they have been able to achieve home ownership otherwise.

    Home ownership, a bedrock of a civil society, is now constrained by multiple agendas of so-called urban planners, greenies, and bureaucrats of every stripe. I mean, in the C21st, what is so difficult about building a bloody house? We’re not talking cutting edge technology here.

  99. Kaboom

    Joe, you say:

    b) banks when finding the funds to fund the credit expansion go searching of foreign equity bond markets which increases the demand for the Australian dollar (resulting in lower prices for goods that are other indicators of standard of living – e.g. cars etc);

    I’m sorry, as a now world famous ignoramus, please bear with my question.

    How is it that Australian banks seeking finance offshore (by selling AUD bonds effectively) manage to increase demand for the AUD? I would have thought the opposite, but then again, I am a Bear of Very Little Brain…

  100. Aristogeiton

    Who would have thought Joes’ s grasp of economics is as weak as his of the law?

  101. Aristogeiton

    johanna
    #1341042, posted on June 9, 2014 at 11:11 pm
    Kaboom, DNFTT.

    Good advice. I just can’t help myself.

  102. Joe Goodacre

    Kaboom,

    The banks can’t lend US dollars in Australia. The offshore purchase of Australian bank debt is a capital inflow – see graph 3 in the link below.

    During the large growth in housing prices in the Howard years, Graph 3 shows more debt was issued by the banks and purchased by offshore purchasers.

    http://www.rba.gov.au/speeches/2014/sp-ag-200514.html

    The Australian dollar also increased during this period.

    http://www.exfin.com/historical-forex-aud

    Other investment in mining was also a driver – but housing prices can remain above historical benchmarks because the floating Australian dollar and bank deregulation means that people think they’re wealthier with rising house prices and rising Australian dollar with it actually being a transfer of wealth to bank shareholders and employees.

  103. Joe Goodacre

    Note that when the GFC hit, offshore purchases of bank debt dropped substantially and the dollar has since fallen back to it’s pre GFC levels.

    Graph 4 shows that when the banks issued less debt purchased by foreigners, the Australian dollar stayed high because this was replaced by investment in the resources sector and the issuance of public sector debt.

    It’s hard to say how much of Sydney’s prices are related to the wealth effect vs land use policies but to me they both play a part in propping up housing prices.

  104. Joe Goodacre

    Who would have thought Joes’ s grasp of economics is as weak as his of the law?

    So whose right Ari – you or the RBA?

  105. JC

    Graph 4 shows that when the banks issued less debt purchased by foreigners, the Australian dollar stayed high because this was replaced by investment in the resources sector and the issuance of public sector debt.

    How the fuck do you know foreigners were purchasing debt at the time, badacre?

  106. Aristogeiton

    ‘Who’s’ != ‘whose’.

  107. JC

    The banks can’t lend US dollars in Australia.

    Yes they can, you simpleton. I borrow myself from a US I-bank to sometimes finance US stock purchases that that I don’t want to finance by exchanging Aussie for US Dollars and creating a FX risk.

    STFU as you have no idea what you’re talking about.

  108. Joe Goodacre

    And your answer – you or the RBA. Who should we defer to for economics advice?

  109. Joe Goodacre

    JC – If you had read the context you would realise the funding is in relation to residential mortgages. Have you bought any properties in Australia recently with US dollars?

  110. Aristogeiton

    Cockmicron, you’re going to have even less success lecturing people here on the subject of economics than on law.

  111. JC

    JC – If you had read the context you would realise the funding is in relation to residential mortgages. Have you bought any properties in Australia recently with US dollars?

    There was no context. You’re statement was pretty clear and it’s completely wrong, Badacre. Just wrong. Australian banks do lend in foreign currency is Oz. Shut up.

  112. Joe Goodacre

    Keep digging your hole JC and when you’ve had enough, let me know of the Aus bank that lets you buy Australian property with US dollars.

  113. Joe Goodacre

    What a surprise – Ari can’t put together an actual argument as to why the RBA is wrong and he is right.

  114. Joe Goodacre

    JC
    How do you know foreigners were purchasing debt at the time, badacre?

    Because Graph 4, if you read it, is called foreign investment in Australia.

  115. Joe Goodacre

    got to go – better luck next time trolls.

  116. Aristogeiton

    God, what a fuck.

  117. Aristogeiton

    I know johanna…

  118. .

    During the large growth in housing prices in the Howard years, Graph 3 shows more debt was issued by the banks and purchased by offshore purchasers.

    No, it shows MBS were financed from USCP given their persistent CAD and BOP deficit.

    This is obvious if you look at the source data.

    Because Graph 4, if you read it, is called foreign investment in Australia.

    This is outrageously inaccurate to surmise such a thing. This conflates FDI with FPI which behave totally differently and have different causes and mechanisms for entry and exit.

    It’s hard to say how much of Sydney’s prices are related to the wealth effect vs land use policies but to me they both play a part in propping up housing prices.

    This guy will say anything to defend the status quo and promote the idea that liberty makes us worse off.

    You have no fucking idea, Goodacre.

  119. nerblnob

    brc, thanks for your excellent input.

    This:

    He tells me tales of petty councillors who nod and work with them and then pull the rug publicly on them in backstabs – supporting a project while in planning, then dumping on them once it is announced. They do this to collect votes from Nimbus and to pretend they are powerful little somebodies.

    is the same with oil & gas projects: companies spend years jumping through hoops until the relevant and irrelevant) authorities and “community groups” are satisfied, then as soon as drilling or site preparation starts, they very same politicians who approved the project jump on the anti- bandwagon.

    The biggest laugh is the ones who know of the years and years of studies and regulatory hoops who then state that “more studies are needed” and “new regulations are needed” and so on.

    I say laugh, I mean bitter laugh. Then even if you can appease that lot, you get the Johnny-come-latelies who simply camp at the site, harass workers, block roads, chain themselves to gates and other fascist bully tactics.

  120. johanna

    nerbnlob – you can never appease them. You just have to ignore them, and do whatever you planned to do.

    Every step that you take back is another step forward for them.

    That is not just a lesson in planning politics, but in life.

  121. nerblnob

    Johanna, most oil and gas companies try to be good corporate citizens. They’re aware they have a bad image, whether deserved or not (and occasionally it has been deserved) , and do their best to do a lot of extraneous good stuff they don’t really have to do.

    Trouble is they’re mostly engineers who believe that the facts will win over propaganda in the end, otherwise planes would fall out of the sky, bridges would collapse, etc.

    A good example was when Santos took over Pilliga and started with an environmental assessment, finding some evidence of elevated radiation levels which they reported to to the relevant authorities. Look how it was written up by the SMH.

  122. john constantine

    had a mate just buy a 4 bedroom house on a quarter acre block in a small country town for 80 grand.

    he has shearing work in the area, good money as long as his body holds up.

    these sort of houses are no good for the investor, as the maintainance explodes if it isn’t owner occupied, and the capital growth won’t happen.

    it is all too common to see ‘read kiyosaki’ positive cashflow believers come and buy half a dozen cheapies at a time, and just bleed out–what they don’t pay in interest, they pay multiples on the slow weeping repairs ulcer that never heals.

    good for the real estate agents that keep reselling the same places.

    when there is plenty of land, nobody bleeds out on doer uppers, they build a new low hassle place first up.

  123. .

    John – I’m puzzled as to what is wrong with positive cashflow?

  124. brc

    It’s not a positive cashflow property if you bleed out. That is just poor selection of investment.

    I have committed to only purchasing positive cashflow investments. If you optimise for making money,then you have to make money. This makes it virtually impossible to purchase property in this country, unless you want a 50% deposit and shocking cash on cash return.

    The best way to make money on property has become the person who fights the bureaucrats and gets land repurposed from something else to being able to have a house built. That is much harder than fixing toilets or repairing weatherboards, but it’s where the value is.

    Incidentally, someone mentioned the ghost Chinese cities. I read an interesting book which talked about how property developed in China. Essentially peasants have collective villages. A peasant can’t sell his plot because it belongs to the village, which belongs to the state. But if the village can collectively sell its land to developers, those who out the deal together – obeidian style – can make the profit. The cash from converting the land from unsaleable communal property to saleable private property is used to fund the buildings etc. this is done as a giant bet that people from other rural areas will decamp and come and live, particularly if they can convince factories to relocate as well. It has worked hundreds of times but it can go wrong, and what you end up with is ghost towns.

  125. Robert Blair

    brc:

    I have committed to only purchasing positive cashflow investments

    Please expand.

  126. .

    I have committed to only purchasing positive cashflow investments

    That’s what we all thought at t=0

    ???

    I guess, make money when you buy rings true.

  127. struth

    There’s no other subject lke housing to show you just how controlling, interfering and parasitically over the mark our governments are.
    Toslowly rreverse this problem in my opinion, that governments and departments can’t argue with is to get the people out of the city.
    There are many regional areas with very cheap housing (by comparison) and a tax break to get business to relocate to those areas would be a start. Something a gutless government might even consider. Oopa back to work.

  128. johanna

    Gee, struth, like nobody has thought of that or tried it before? It has been tried, many times, in many countries. It doesn’t work, but wastes lots of taxpayer dollars.

  129. There are many regional areas with very cheap housing (by comparison) and a tax break to get business to relocate to those areas would be a start.

    name a non-remote regional area with ‘very cheap’ housing.

  130. johanna

    And, Aussiepundit, if significant sized businesses do start up outside major cities and towns, it drives up the price of housing. Look at places where big mining ventures operate as an example.

    Decentralisation has emotional appeal, but it is hard to think of examples where it has worked in practice absent either natural resource deposits or bucketloads of government subsidies. And it doesn’t make any noticeable impact on housing costs overall.

  131. .

    Regional NSW follows the nearest capital city for prices.

    Capital country isn’t over pried on raw data but it is pulled up more than expected due to the overblown ACT market.

    My view is ACT is more overpriced than Sydney as it’s nearest beaches are about 90 minutes away. It is like paying city prices to live in Penrith.

  132. .

    struth is right.

    The solution is more subsidiarity of functions to the local level, smaller government and more states.

    Sydney was declared full by Bob Carr who stopped building infrastructure. Did he freeze NSW PS employment?

    I’m still sceptical that we even needed to build Canberra, but it would have taken pressure off Melbourne I suppose.

  133. johanna

    Dot, Canberra housing is overpriced because people can afford to pay more than say, people in Orange or Dubbo. The Public Service provides a large pool of people with high incomes and secure jobs. Also, the ACT government strictly controls the supply of land for its own revenue purposes. But even if land was cheaper, people would just build more expensive houses, because they can afford to spend a lot on housing, and the family home is a tax shelter.

  134. brc

    brc:

    I have committed to only purchasing positive cashflow investments

    Please expand.

    Simple really. I won’t buy something unless the income from the property exceeds the expenses.

    If you think that makes the pool of avialable properties to purchase very small, you’d be right. If you think that excludes just about all residential property in this country, you’d be right.

    Of course things can go wrong and vacancy etc can cause an issue, but I’m not going to buy some house and subsidise the lifestyle of a tenant on the off chance that maybe, one day, the government prohibition on new houses means that a big payoff will happen.

    If your investment produces cashflow from day one, it doesn’t really matter what the value of the property is.

  135. john constantine

    it was only recently that a bloke went belly up after spending a lot of borrowed money to put together an empire of low cost remote housing. i know one of the builders that was on retainer to do ‘fixes’ for the tenants, as the owner didn’t do hands on work, just deals.

    although each individual house when purchased returned monthly rental income exceeding interest costs, rates began going up, insurance went up, and if you try to own 100 old cheap houses, and rent them to people that cannot afford to buy a house where rent is dearer than interest, you gain experience.

    there are only 38 hours a week that repairs cost the base rate, the rest of the 168 hours, it is penalty rates.
    when a plumber has to be called out overnight on a holiday weekend to fix the hot water service running water down through the roof, it costs penalties, plus travel costs for a 300/400 kilometer round trip.

    remote cheap houses have an interest cost, rate costs,insurance costs, plus ‘depreciation liabilities’ that will have to be met, forever or until it burns down.

    like buying a real cheap 1970′s alfa romeo for a grand, it isn’t the initial cost, but the running costs that are the real issue. Imagine owning this alfa a significant distance from anybody that would repair it, and you start to get an idea of repair bills that eat a decades free cash flow, and things just keep going wrong all the time.

  136. Joe Goodacre

    Dotty,

    You haven’t explained why the following is incorrect…

    That banks prior to the GFC have funded from offshore capital, the increased demand for credit by Australians looking to buy homes.

    That since Australian’s buy homes in Australian dollars in one lump sum, when a mortgage is funded from offshore sources it must be converted into Australian dollars to fund the property transaction.

    This flow of capital to Australia creates upward pressure on the Australian dollar. The upward pressure on the Australian dollar lowers the cost of imported goods and travel which has a wealth effect. This encourages other people that they have the means to purchase property – so they do which is funded by further offshore funding and the wealth effect continues. It is true that banks must pay back these borrowings in foreign currency which is downward pressure on the dollar, except these repayments occur over a much longer time frame than the initial drawdown, hence there being a bump in the Australian dollar in the short term.

  137. johanna

    Fertiliser spill in Aisle 5.

    Cleaners are advised to wear masks.

  138. .

    johanna
    #1342737, posted on June 11, 2014 at 9:12 am
    Dot, Canberra housing is overpriced because people can afford to pay more than say, people in Orange or Dubbo. The Public Service provides a large pool of people with high incomes and secure jobs. Also, the ACT government strictly controls the supply of land for its own revenue purposes. But even if land was cheaper, people would just build more expensive houses, because they can afford to spend a lot on housing, and the family home is a tax shelter.

    Yes Johanna but there is no guarantee they are productive. Canberra is a special case because of the land restriction. Which goes along with what I’m saying about capital country being more overpriced than say Kyneton for example.

  139. brc

    John – right. Property is not a share portfolio – each one has its merits. A tiny bit of sensitivity analysis on his calculations should have necessitated some contingency. People should really buy local unless they have deep pockets or someone trusted who is local.

    Sometimes whether a property is worth buying or not can come down to what sort of tree is growing in the front yard.

  140. .

    You are wrong Goodacre because you are conflating entities and liquidity risks as well as on and off balance sheet liabilities, as well as framing the FX valuation in terms of one sector alone. USCP and their persistent BOP deficit and size already put upward pressure on the dollar. It was already priced in.

  141. brc

    But even if land was cheaper, people would just build more expensive houses, because they can afford to spend a lot on housing, and the family home is a tax shelter.

    There is an upper limit on this. I don’t agree that if land fell by an average $100,000 then people would add $100,000 to their budgets and spend the same amount of money. That much cash buys you an extra couple of rooms and at the margin people are going to direct the extra at other spending or investment.

    Car leases are an example, there is a tax benefit to leasing a car. That doesn’t mean everyone goes for a 7 series on their lease. At some point people choose to direct their cash elsewhere. But properties are priced such that the minimum car you can buy is priced like a 7 series, but the value you get is a 1 series.

  142. .

    Correct, brc

    As John Humphreys once said:

    In economics, the optimal value usually lies somewhere between zero and infinity, and is nearly never either zero or infinity.

  143. johanna

    dot, I never said that they are productive!

    brc, must disagree. While I don’t claim that every dollar saved on land costs would be redirected into building costs, history tells us that most of it will be. That is why new houses are twice as large as they were in the 1950s. Because we can afford them, and it also makes sense from the perspective of avoiding CGT, and being eligible for welfare. And while it may not always be economically the best use of our money, most people have a hard-wired desire to have the best home that they can afford.

  144. .

    Johanna it also makes sense because of stamp duty and minimum use rules, and previously, artificially low interest rates.

    You really mist see what a yank pays for nice home (even pre GFC). It is disgusting and mind blowing how much we pay for anything halfway decent – or at all.

  145. johanna

    It is disgusting and mind blowing how much we pay for anything halfway decent – or at all.

    No argument there. I am going to sell my house sometime in the next few years, and have started to look around at alternatives.

    In the 1980s I lived in a superb Art Deco 1930s apartment in Elizabeth Bay, which was then much more affordable than it is now. It was light and airy, spacious, and soundproof. The building would have taken a major bomb hit to even damage it.

    Recently built apartment blocks are absolute rubbish, including very expensive ones. The same goes for most houses.

  146. Joe Goodacre

    conflating entities and liquidity risks

    What specifically are being conflated?

    on and off balance sheet liabilities

    When the banks borrow sums they’re on the balance sheet.

    When they lend, those are also on the balance sheet.

    What’s the off balance sheet liability you’re referring to?

    framing the FX valuation in terms of one sector alone

    I agree that the FX valuation is not limited to what the banking sector alone does – I’m only describing an upward pressure from one sector and suggesting that it’s a substantial effect because at the peak prior to the GFC, bank were funding credit expansion in Australia with funds from overseas totaling 8% of GDP. The average from banks was 5.4% of GDP from 1998 to 2007.

    Mining is considered a large sector with impacts on the Australian dollar and from 2008 to 2013, foreign capital inflows only accounted for 1.6% of GDP.

    USCP and their persistent BOP deficit and size already put upward pressure on the dollar. It was already priced in.

    What do you mean by USCP’s BOP deficit and size – commercial paper is issued by many entities in the US. Who are you saying is in a balance of payments deficit?

  147. brc

    brc, must disagree. While I don’t claim that every dollar saved on land costs would be redirected into building costs, history tells us that most of it will be. That is why new houses are twice as large as they were in the 1950s. Because we can afford them, and it also makes sense from the perspective of avoiding CGT, and being eligible for welfare. And while it may not always be economically the best use of our money, most people have a hard-wired desire to have the best home that they can afford

    I don’t agree. While there is no doubt that houses are twice the size they were in the 1950s, I’d have to see the % of disposable income that goes to the house component (as opposed to the land component). Improvements in building technology has reduced the cost of building since then – even electric saws and drills were rare in those days – but the land component has gone from negligible to almost 2/3 the cost of a dwelling.

    I would say that – if presented with the option – were land prices to drop, people wouldn’t spend the savings on larger homes and spend the same amount. The vast bulk of housing purchases (new build) is 4-2-2 houses. I doubt a drop in land prices by 150k would change that preference to 5-3-3. Some would choose to spend the money on a bigger house, some might respond by purchasing a bigger block, and some would be relived the entry price has dropped and save the difference. I would say the biggest cohort would be those who were happy to get a new house for less money. Housing shortages at an affordable level are acute.

  148. .

    You are conflating securitisers and bond investors. Banks and finance companies owned or did own subsidiary securitisers as well as having securitised mortgages which grew more than the deposit base. For a bank, securitisation was (at the time) a way to achieve off balance sheet funding as well as a way to increase their CAR. The accounting rules were not as tight then.

    Ignore the sectors. The macro aspect of what America does is more relevant than any one sector we have (or our own domestic macroeconomics). Run a simple regression and the numbers will bear out themselves.

    Their BOP (driven by loose MP) predicts what our dollar will do. Their investors were liquid because of CP (which was engendered but not necessarily funded by loose monetary policy)

  149. johanna

    brc, against that we have to look at the percentage of income now required to buy a home. It is certainly higher than it used to be, but 1.5 and 2 income households have nevertheless continued to drive the market. People are still devoting a huge slab of their income towards saving for, or buying, a home. And the homes they are buying are much bigger and better than those their parents and grandparents bought.

    It doesn’t matter much what the land component is (in cities and large towns). Buyers can’t control it. Nevertheless, houses are getting bigger, because people can afford it, even if the land costs more. And that is the point that I am making.

    Location, location. Anyone can buy a cheap block in the middle of nowhere, but nobody wants to live there, because they can’t earn sufficient income. Whereas, while Sydney or Canberra have high house/unit prices, people pay it because they can earn enough to cover the mortgage.

  150. struth

    My point is that in a perfect world we would not need discuss it. However a politically lethargic population in this country let gov artificially inflate prices for their own greed beyond any other country in the world. We are not going to get this changed soon. So use the market.
    Some points.
    Please do not use outback towns and remote areas that are extorting a particular areas mine using all manner of corruption including abo land rights to create some of the unbelievable un affordable situations out there. I am not talking about that.
    Regional areas and there are plenty of them.
    Coastal qld
    Country vic west
    Etc etc
    Housing at affordable prices but no work because the government makes conditions too hard for aussies to compete.
    Lots of immigrants to cities don’t come from just overseas but from these areas putting even more demand on a government controlled supply and price.
    We all know what the problem is, I was just thinking of ways to gently try to reverse the situation without too much pain.
    Comparable countries of similar size don’t try to jam all their population into just the capitals.
    Usa has many cities under one million people.
    I can’t see where creating tax incentives NOT subsidies to relocate business and attract investment into regional areas like Albury or Horsham or Roma would not attract people back or to just go there for work and take at least some demand away from dumps like Sydney.
    If they make buying a home impossible in Sydney get some competition going.
    Some people seem to agree with the theory that attractive tax situation In Australia would give us better foreign investment but don’t think the same applies regionally. I reckon it would.

  151. johanna

    struth, that’s not how things work.

    People and businesses locate where they do because that is the best choice for them. They are not being forced to do anything.

    The things you advocate have been tried many times in many countries. But they just don’t work.

    Get over it.

  152. struth

    So you’re telling me businesses don’t do what’s best for them?
    Tax wise?
    Just recently in Australia a fuel tax rebate was to be had for transport companies that were located a distance from a C B D and it worked a treat. All I am hearing is aloof posturing with no proof. By the way, I knew I’d be up against it with this because in my experience it is something townies especially don’t want to hear. Strange.
    Especially the ones that measure success in life by the Metres from the GPO.

  153. struth

    Alot of business is now relocating overseas and it ain’t all to do with cheap labour

  154. Joe Goodacre

    struth, that’s not how things work.

    People and businesses locate where they do because that is the best choice for them. They are not being forced to do anything.

    The things you advocate have been tried many times in many countries. But they just don’t work.

    Get over it.

    Exactly my point regarding the hypocrisy of militant Libertarians.

  155. Aristogeiton

    Joe Goodacre
    #1343271, posted on June 11, 2014 at 4:36 pm
    [...]
    The things you advocate have been tried many times in many countries. But they just don’t work.
    Get over it.

    Exactly my point regarding the hypocrisy of militant Libertarians.

    Yes, libertarianism has ‘been tried many times, but it just doesn’t work’. This is from the same genius who accuses Henry Ergas as being a poor economist and ‘manipulator’, compared to his good self and m0nty, when in actual fact he is incapable of reading a clearly-labelled graph.

  156. Aristogeiton

    s/as being/of being/

  157. .

    Wrong Goodacre.

    It is working. You just don’t like it.

  158. Aristogeiton

    .
    #1343298, posted on June 11, 2014 at 4:55 pm
    Wrong Goodacre.

    It is working. You just don’t like it.

    Joe Bolviacre’s lies of recent memory include the assertion that Milton Friedman and Thomas Sowell support prohibition. The lie was retold, with much bloviating dissemblance, even despite being shown clear evidence of the strident views of both men to the contrary.

  159. .

    Joe Bolviacre’s lies of recent memory include the assertion that Milton Friedman and Thomas Sowell support prohibition.

    Outrageous. Fucking outrageous.

  160. Aristogeiton

    .
    #1343313, posted on June 11, 2014 at 5:03 pm
    Joe Bolviacre’s lies of recent memory include the assertion that Milton Friedman and Thomas Sowell support prohibition.

    Outrageous. Fucking outrageous.

    Yes. He doubled down by asserting that I didn’t understand as much of Sowell as I represented, and as he did. What a blowhard.

  161. Joe Goodacre

    If people make choices that are best for them in other aspects of their life, why is the society they live in and the laws that they live under (including the mechanism for those laws to be changed) an exception?

  162. Aristogeiton

    He’s latterly covered himself in glory in this exchange. Watch as the lies evolve, moving from the audacious to the qualified, until it becomes clear that he just can’t read a clearly labelled graph.

  163. Aristogeiton

    Joe Goodacre
    #1343319, posted on June 11, 2014 at 5:07 pm
    If people make choices that are best for them in other aspects of their life, why is the society they live in and the laws that they live under (including the mechanism for those laws to be changed) an exception?

    No. You want to make the decision. That’s the truth here. You don’t care a whit for people and their decisions, only that your will be done and you can continue to mooch off of the hard work of others.

    Also, liberty quote:

    “[T]here is no such thing as society. There are individual men and women, and there are families. And no government can do anything except through people, and people must look to themselves first. It’s our duty to look after ourselves and then, also to look after our neighbour. People have got the entitlements too much in mind, without the obligations, because there is no such thing as an entitlement unless someone has first met an obligation”
    (Margaret Thatcher)

  164. Leo G

    Meanwhile Australia is among the most expensive housing markets in the world in spite of the ample land on the periphery of all our major cities

    Shouldn’t that suggest that the “ample land on the periphery” is not the cause of the problem. Even if more of that “peripheral” land were to be released in stages, that land would not be suitable for higher density development and would aggravate existing congestion and headwork problems.
    The problem appears to me to involve a failure of planning for intensive inner-city high-density communities, and is essentially behavioural.
    Why not develop the city according to the strategy of its best planners in the early 20th century? The metropolitan area does not really need to grow in extent, and the average urban population density of Sydney has declined since that time. Why should that absurd trend be indulged?

  165. .

    Aristogeiton
    #1343321, posted on June 11, 2014 at 5:08 pm
    He’s latterly covered himself in glory in this exchange. Watch as the lies evolve, moving from the audacious to the qualified, until it becomes clear that he just can’t read a clearly labelled graph.

    He forewarned us what he says changes as he pleases.

    More fool us.

  166. Joe Goodacre

    You don’t answer the question - If people make choices that are best for them in other aspects of their life, why is the society they live in and the laws that they live under (including the mechanism for those laws to be changed) an exception?

  167. Aristogeiton

    Joe Goodacre
    #1343353, posted on June 11, 2014 at 5:27 pm
    You don’t answer the question – If people make choices that are best for them in other aspects of their life, why is the society they live in and the laws that they live under (including the mechanism for those laws to be changed) an exception?

    This question is dishonest in it’s use of ‘people’. What you mean to say is that any interference with individual liberty is morally acceptable provided that the formal constitutional and political-institutional framework can deliver the restriction in the form of a recognisable legislative act or executive command.

    But, you’re guy that thinks that the executive controls the judiciary, so it’s pointless discussing constitutionalism with you. You’re just vomiting up more Hobbsean nonsense with your CliffNotes on ‘Social Contract Theory’. You should have kept reading, as I suggested earlier, on to Locke and Mill.

  168. Aristogeiton

    Joe Goodacre
    #1343361, posted on June 11, 2014 at 5:31 pm
    Silence…

    I was taking a shit, which was unsurprisingly more entertaining than this.

  169. Aristogeiton

    I can’t believe that you were awarded an LLB.

  170. Aristogeiton

    I can sense you furiously consulting Wikipedia (a far more authoritative than the ‘leather-bound books’ you deride) to come up with some dribbling apologia. Don’t bother. I’ve got some drinking to do and I don’t care to read any more of your woeful bullshittery.

  171. Aristogeiton

    /a far more authoritative/a far more authoritative source/

  172. Joe Goodacre

    You’ve answered something from someone but not the question I’ve asked.

    If people make choices that are best for them in other aspects of their life, why is the society they live in and the laws that they live under (including the mechanism for those laws to be changed) an exception?

    The best you can come up with is that my use of the word ‘people’ is dishonest?

  173. You’ve answered something from someone but not the question I’ve asked.

    If people make choices that are best for them in other aspects of their life, why is the society they live in and the laws that they live under (including the mechanism for those laws to be changed) an exception?

    the answer is this.
    If socieyt and its laws are just part of the ‘choices’ people make in life – or in other words, if we follow your logic and think of laws as just part of the free market writ large – then all laws are moral and just.
    But that’s not the case. Therefore your logic fails.

  174. typo alert.
    typos don’t make me any less correct, just harder to read. but for the pedants, without typos,

    If society and its laws are just part of the ‘choices’ people make in life – or in other words, if we follow your logic and think of laws as just part of the free market writ large – then all laws are moral and just.
    But that’s not the case. Not all laws are moral or just.
    Therefore your logic fails.

  175. Joe Goodacre

    Aussiepundit,

    That was originally my problem with this question as well.

    Is there such a thing as an immoral law in a society that doesn’t restrict the movement of people?

    I don’t believe it’s consistent to argue that there is a lack of consent for laws when people can argue to change them, can vote to elect officials who may change them, or can leave the society.

    This takes us back to the question – if people choose what’s best for them in all other aspects of life, why does this not extent to the country that they live in and the laws that they are governed by when no one is restricting their speech, vote or movement?

  176. Joe Goodacre

    To be more specific, isn’t the key characteristic of liberty that the ability of people to make choices regarding their life is an end in of itself – i.e. people consenting is moral and just in libertarianism.

  177. JC

    Badacre

    I’d like to stick you stupid head in a vice, tighten it and leave you there for 7 1/2 days. Why the extra 1/2 day? I’m just mean to nutballs.

  178. Joe Goodacre

    and I’d like my bathroom renovations to do themselves.

    Have any input to the question?

    if people make choices that are best for them in their life, why is the society that they live in and the laws that they live under an exception when they’re free to vote, argue or leave?

  179. Joe Goodacre

    While the crickets are chirping I’ll go back to grouting the kitchen floor.

    From experience – be clean while you work. The easiest time to remove grout and adhesive is when it’s wet. Also don’t buy unglazed tiles.

  180. Leo G

    and I’d like my bathroom renovations to do themselves.
    Have any input to the question?

    If you have the ability to complete your bathroom renovations, using public and private resources, then you have real liberty in that respect.
    Otherwise you might only have permission, ie the absence of societal constraints, in renovating your bathroom. The latter is a lesser liberty, a freedom from restrictions, a negative right.
    Putting the restrictions on yourself and willing the bathroom t0 renovate itself, is to deny yourself even the negative right.

  181. Aristogeiton

    Joe Goodacre
    #1343432, posted on June 11, 2014 at 6:44 pm
    While the crickets are chirping I’ll go back to grouting the kitchen floor.

    Yes. Such a vast and profound philosophical question is beyond modern philosophy, save for the philosopher-king Bloviacre, and is beyond the feeble minds here. It’s not like any work was done on Social Contract Theory after Hobbes. You arrogant, blowhard, know-nothing.

  182. Joe Goodacre

    It’s a simple question – presumably there’s a simple answer?

  183. JC

    Badacre

    Go do some tiling as you’re annoying the hell out of people here.

  184. Aristogeiton

    Joe Goodacre
    #1343478, posted on June 11, 2014 at 7:22 pm
    It’s a simple question – presumably there’s a simple answer?

    The simple answer us fuck off and read more; Locke and Mill at least. Don’t give me your ‘summarise it in three sentences or less’ bullshit. Don’t come back until you understand. I don’t expect ever to see you again.

  185. Joe Goodacre

    The only restriction on myself Leo G is competence related..

    Took the week off work to work on the bathroom but with multiple drains and converting the shower from one with a hob to one without, it’s a bit of a challenge. Was going to do the suspended ceiling myself but no time – too much to learn.

    If JC was forced to mix sand and cement for the screed for me, maybe then I’d have real liberty to do the bathroom.

  186. Aristogeiton

    My wife, upon me reading her some of your bloviations, and without any mention of the theory, exclaimed ‘He doesn’t understand contract theory at all!’. She’s a smart woman, that.

  187. Joe Goodacre

    JC – grout has to sit for 5 mins before it can be used apparently.

    So Ari – you don’t know the answer?

    Normally you’re pretty quick to quote the source when you have one. Particularly if it makes you look like you’ve smashed the question out of the park. Slipping away with a ‘go read Locke etc’ is probably as close as you give to ‘I don’t know’.

  188. Aristogeiton

    Joe Goodacre
    #1343491, posted on June 11, 2014 at 7:29 pm
    The only restriction on myself Leo G is competence related..

    Finally. Agreement!

  189. Leo G

    Waterproofer’s licence is a negative liberty.

  190. Joe Goodacre

    My wife says she wishes the time you and I spend together was spent on her instead.

    In all seriousness though – I’m familiar with contract theory what element answers…

    If people make choices that are best for them in their life, why is the society that they live in and the laws that they live under an exception when they’re free to vote, argue or leave?

  191. Joe Goodacre

    Tell me about it Leo G. There’s a whole bunch of trades people are forced to go through.

  192. Joe Goodacre

    Ari this is the only unfinished business between us…

    If people make choices that are best for them in their life, why is the society that they live in and the laws that they live under an exception when they’re free to vote, argue or leave?

    Don’t let it end with unfinished business between us.

  193. Is there such a thing as an immoral law in a society that doesn’t restrict the movement of people?

    yes, because completely free movement for the population isn’t ever a reality.

  194. Aristogeiton

    Joe Goodacre
    #1343537, posted on June 11, 2014 at 8:07 pm
    Ari this is the only unfinished business between us…
    [...]
    Don’t let it end with unfinished business between us.

    Finish yourself off, or prevail upon your frustrated wife to do so; I don’t give a fuck.

  195. Joe Goodacre

    You keep saying you don’t Ari, but your actions say otherwise.

  196. Aristogeiton

    Joe Goodacre
    #1343661, posted on June 11, 2014 at 10:07 pm
    You keep saying you don’t Ari, but your actions say otherwise.

    FOAD.

  197. brc

    Trying to get this back to talking about properties instead of idiotically feeding a troll.

    It doesn’t matter much what the land component is (in cities and large towns). Buyers can’t control it. Nevertheless, houses are getting bigger, because people can afford it, even if the land costs more. And that is the point that I am making.

    Location, location. Anyone can buy a cheap block in the middle of nowhere, but nobody wants to live there, because they can’t earn sufficient income. Whereas, while Sydney or Canberra have high house/unit prices, people pay it because they can earn enough to cover the mortgage.

    My points were theoretical – regardless of the extra income, I maintain that people would not spend all the extra saved if land prices lowered on larger/more lavish houses to go on that land. Some would definitely be saved. The meat in the housing market is 4-2-2 and the largest component of the price is the land. If you reduced the land price then the overall package would fall. It’s true that some people would just spend more on the house – but – overall – these are a minority in the market. The increase in house sizes is really a function of building productivity increasing despite the increasing impost of land prices.

    As for location, location driven by work – this is changing quickly. I can work anywhere Telstra builds a 4G mast. But even the blocks in the middle of nowhere are not cheap. You *should* be able to buy a corner off a farmers land for a bit above the per-acre going price for land, but there is essentially nowhere you can do this (unless you strike a sweetheart deal with the farmer and the local authorities). It’s true that regional centres are cheaper than Sydney, but many are not as cheap as they should be.

    Nonetheless, what we need is land use reform.

  198. johanna

    I thought the fertiliser spill in Aisle 5 had been cleaned up (cleaning staff must use masks and gloves).

    Apparently not.

    The stench is pretty bad.

  199. Aristogeiton

    johanna
    #1343726, posted on June 11, 2014 at 11:01 pm
    I thought the fertiliser spill in Aisle 5 had been cleaned up (cleaning staff must use masks and gloves).

    Apparently not.

    The stench is pretty bad.

    The smell is bullshit.

Comments are closed.