The Claw

10 Steps to a Housing Disaster

3 posts in this topic

10 Steps to a Housing Disaster

Starting with only 21 million people and a giant island with 100 acres of land per person, how could we engineer some of the least affordable housing on the planet?

Here is a recipe to make housing unaffordable:

Step 1 - CHOKE NEW CITIES

Divide the island into 7 states and create one giant city per state. Force almost all the people into the giant cities with policies such as:

* All business zoned in the centre of the city

* All government departments must be in the capital city

* Non-giant cities given terrible infrastructure

With decent transport this gives 7 areas with 40km radius, approximately 1700 square metres per person. Still too much land to create a crisis!

Step 2 - CHOKE TRANSPORT

Neglect the transportation system so that it is not practical to live more than 20km from the city centre. This cuts us back to 400 square metres per person. Still plenty of space on average, but the largest cities will need some high-rise housing to get by.

Step 3 - CHOKE HIGH-RISE

Refuse permission for high-rise in many cases. Old suburbs must be preserved for the old people who still live there. No extra housing to be built for young families.

Step 4 - CHOKE LOW-RISE

Much land within range of the city to be kept off the market in the form of national parks, government land and farms without permission to subdivide. If you have 5 acre or 25 acre farms within reach of CBD then declare the area semi-rural and don't allow extra housing there. With policies like this even low-population cities like Darwin and Hobart can have a housing crisis!

The first four points will choke-off all avenues of extra housing supply, so now let's increase the need for extra houses - one house per family - by increasing the number of families.

Step 5 - HAVE LOTS OF BABIES

In 20-30 years they will leave home to start extra families.

Step 6 - INVITE IN MANY IMMIGRANTS

Why not increase the immigrant intake to record numbers?

Step 7 - DIVORCE IN RECORD NUMBERS AND LIVE LONGER

This will result in a declining number of people per household. We need more dwellings for a given number of people.

Now with the supply of extra houses choked and the need for extra houses increased, price will race upward, as the poorer families are priced-out of housing. Now let's goose the price even more with idiotic economic "demand side" techniques

Step 8 - LOWER INTEREST RATES AND LOWER LENDING STANDARDS

Instead of paying off a $100,000 house at 13% interest, why not service a debt of $500,000 at 7%. Why not use 80% of two incomes and eat poverty food for the rest of your life?

Step 9 - FIRST HOME BUYER'S GRANT

It won't create a single extra house, but it might drive existing house prices up.

Step 10 - TAX ADVANTAGE TO SPECULATORS

With prices racing up, beyond the reach of first home buyers, give more money to those people most capable of driving prices even higher. Use government tax money to encourage rich people to borrow money and buy existing housing to rent-out to poor people. We can pretend that this creates extra cheap housing and is good for the poor people.

Step 11 - A WORLD-WIDE CREDIT BOOM AND ASSET BOOM

Improper to include in the list of 10, but it doesn't hurt to mention it.

.....

Poking Demand and Choking Supply

Government has done something very bad to the supply and demand of starter homes which has led to outrageous prices of starter homes, and supported much higher prices of better homes. In short, government has poked the demand and choked the supply of starter/marginal/extra homes.

Poking Demand:

* Government brings in many immigrants

Choking Supply:

* Government refuses permission to build extra housing on the fringe or extra units in the city, and new cities

* Government adds taxes, charges and levies to extra housing

* Government requires onerous compliance with regulations

* Government creates delays in approving dwellings.

* Government neglects transport and other infrastructure which reduces the area in which well-located and well-serviced homes can be built

There is much debate on which of the five chokers (refusal, taxes, compliance, delays, neglect) is the biggest and baddest. Interestingly, if refusal is the big one, then lowering taxes will give a windfall to developers, whereas if refusal is a small one, then reducing taxes will cause a drop in prices. This debate is fascinating from an academic point of view, but rather pointless if the aim is to solve the housing crisis.

It is like watching a man being attacked by five dogs and debating which dog has the bigger bite. Far better to chase off ALL the dogs and save the man.

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Step 3 - CHOKE HIGH-RISE

Refuse permission for high-rise in many cases. Old suburbs must be preserved for the old people who still live there. No extra housing to be built for young families.

Could you point out some examples? I drive around many of the same areas as you and the high rises going up in Wahroonga, Hornsby and Turramurra feel like St Leonards in the late 90's.

Step 4 - CHOKE LOW-RISE

Much land within range of the city to be kept off the market in the form of national parks, government land and farms without permission to subdivide. If you have 5 acre or 25 acre farms within reach of CBD then declare the area semi-rural and don't allow extra housing there. With policies like this even low-population cities like Darwin and Hobart can have a housing crisis!

I point you to Hamish post and link:

I've also done a bit of looking around on the NSW Planning Dpt website, which also shows over 100,000 dwelling sites zoned for development, and of those, over 30,000 are already released and serviced in the Sydney region. Land supply pdf on this link It also appears that the majority of these sites, 2/3 or more are owned by development companies, so if there is any 'choking' of supply, it isn't due to the state govt not zoning enough land.

Perhaps the Sydney influx of 50K people (not households) from Tinpushers link:

...of which only 50,000 - 60,000 settle in Sydney

http://www.abs.gov.a...es?OpenDocument

Means we can remove this point from your list now?

There is much debate on which of the five chokers (refusal, taxes, compliance, delays, neglect) is the biggest and baddest. Interestingly, if refusal is the big one, then lowering taxes will give a windfall to developers, whereas if refusal is a small one, then reducing taxes will cause a drop in prices. This debate is fascinating from an academic point of view, but rather pointless if the aim is to solve the housing crisis.

Yes, yes we should always avoid academic discussions, they only lead us into people thinking before acting.

What exactly were your non academic suggestions? Oh you didn't have any! I'd have thought an academic set of theories would have to be followed with recommended actions for it to not be pointless using your logic. Seems you are being pointless deliberately.

It is like watching a man being attacked by five dogs and debating which dog has the bigger bite. Far better to chase off ALL the dogs and save the man.

It is nothing like that, if you have every dealt with a pack of dogs attacking you would know that the only way to chase off 5 dogs is through weaponry, it is a stupid analogy and should be removed if the entire set of ideas is not to be susceptible to accusations of appeals to emotion.

Anyway we have scratched at least one of your points from your list I guess. Must be nice to know the situation is getting better as your problems are slowly removed.

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