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The Forum > Article Comments > Living better than the kids > Comments

Living better than the kids : Comments

By Wendell Cox, published 26/11/2009

The next generation of Australians will have to pay much more of their income for housing than their parents.

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Well said.
Posted by Chris Lewis, Thursday, 26 November 2009 10:19:35 AM
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Usual one-sided pro-sprawl propaganda. Plenty of complaints about restrictions on sprawl. Not a word about NIMBY-controlled local councils that automatically oppose applications to build multiple dwellings on single lots. Not a word about municipal rating schemes that penalize infill development. Not a word about mechanisms for financing improved inner-urban infrastructure to overcome the NIMBY objections. No acknowledgment that it is cheaper to upgrade inner-urban infrastructure for higher density than to build new infrastructure beyond the fringe (because the former option involves replacing old infrastructure-inefficient housing stock). Nothing about the evils of car-dependence, except the claim that "even with more people and land area, Dallas-Fort Worth and Atlanta have average work trip travel times less than Sydney." Could that have anything to do with the harbour and the consequent bottlenecks?

So am I defending restrictions on greenfield development? No, I'm attacking restrictions on infill development (see submission no.70 at
Posted by grputland, Thursday, 26 November 2009 10:21:16 AM
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Wendell Cox identifies the real problem with housing affordability - the cost of urban land - and puts to rest the idea that it is all, or even significantly, due to young people putting up McMansions because they want to have it all right away. Even if they were putting up tarpaper shacks, housing would still be unaffordable.

The government has blown out demand with mass migration (63% of our 2.1% population growth in the year to April 2009) and pronatalist incentives, while constraining supply. The business elite who donate heavily to the politicians benefit from population growth through bigger GNP, giving them more to skim, bigger markets, a cheap, compliant work force, largely trained by someone else, and, of course, profits from urban land speculation. The growth is of no significant benefit to ordinary people, even in narrowly economic terms. See this graph from the US, which has had similar growthist policies,

For the people around and in the cities, there are also many population growth related problems with crowding, noise, traffic congestion, casualisation and other exploitation at work, shrinking housing block sizes or being forced into high density housing, permanent water restrictions with people encouraged to spy on their neighbours, skyrocketing water and utility bills due to diseconomies of scale, crumbling infrastructure and public services, etc. High house prices for existing residents help to buy off opposition to what the government is doing, by apparently letting them in on the scam, although they are really no better off unless they are in a position to move to the country or a small town.
Posted by Divergence, Thursday, 26 November 2009 10:45:17 AM
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Yes Wendell Cox, housing affordability is indeed a major problem.

So what do you think we should do about it?

You write;

“The principal cause of these extraordinary cost increases is the severe housing regulation pervading Australia. Urban consolidation policies stingily limit building on developable land around the cities, forcing most new construction into the existing urban footprint.”

“If development were allowed on the urban fringe, competition between land owners would make houses more affordable.”

“Apologists for the housing unaffordability… point to Australia’s high growth rate and claim that this higher demand drives prices up. However, demand does not increase prices unless supply is constrained. And, land supply has been constrained with a vengeance. It is virtually illegal to develop cheap land on the urban fringe.”

Your solution appears to entirely be to just open up much more land…with no limit…just to keep doing it into the unforeseen future. You don’t imply in the slightest that we should reduce our population growth rate!

This is staggeringly unbalanced!

Posted by Ludwig, Thursday, 26 November 2009 12:14:35 PM
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OF COURSE our government should be keeping a very tight reign on urban development, and not just let our already vast urban expanses in Sydney, Melbourne and other cities continue to expand at a rapid rate, with all the associated problems.

OF COURSE they should not be opening up vast new areas for coastal development or satellite cities or decentralisation nodes or whatever. To a limited extent, yes, but not anywhere near to the extent that would be necessary to significantly lower house prices without addressing the population / immigration / birthrate factors.

In fact, it is quite fascinating that our highly unillustrious government can continue to espouse a record-high population growth rate, while one of the most obvious negative factors associated with it is critically bad and worsening housing affordability…which of course is a huge factor affecting the quality of life of young people, or the whole of society for that matter, and will be even worse for the next generation.

I’m appalled Professor Cox. I mean, the biggest factor in finding a solution is OBVIOUSLY to massively reduce immigration, and to plan for the stabilisation of our population.
Posted by Ludwig, Thursday, 26 November 2009 12:17:40 PM
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There is more than one main factor causing housing unaffordability.

Off the top of my head there are 6 main causes* (including land release regulation/landbanking).

Unless the hydra-headed causes of the life sapping indebtedness encouraged by govt (national, state and local) is tackled, I see a giant fubar unfolding. Who, is dumb enough to want that?

Other causes* (no particular order):
Tax system favours investors thus deliberately sidelining new entrants to RE market;
Failure of ABS to include land component of property in CPI;
RBA failure to monitor and respond to debt surge in Aus;
Third world rate of immigration and;
Open door policy to foreign investors.

The following email letter on ABC site says it all re foreign investors:

Foreign Investors Distorting Housing Market

Housing affordability is not helped by the Rudd Government's reported relaxation of the rules regarding the acquisition of residential property by offshore investors. We already had enough of these home-grown property purchasing parasites, right here in our own backyard, without inviting in cashed up foreign investors absolutely clueless about local values.

Moreover, it's not just the financial market that is quite grossly distorted by a system of commissions. The housing market would return rapidly to more realistic affordable values if all those extracting incomes from the buying or selling of property were salaried officers with real estate principles locked in by law to a standardised fee for a similar service, which would not be impacted in any way by often unrealistic talked up values.

The proposed paradigm would see the wholesale exodus of the unethical get rich quick merchants and far fewer agents sharing a much larger workload between them and indeed enjoying more reliable stable income streams. 25Nov09

For anyone interested in background data on Labor/Liberal deliberate housing mess:

Productivity Commission Inquiry Report No. 28, 31 March 2004 First Home Ownership

2008 Senate report HOUSING AFFORDABILITY - Executive Summary
Posted by leela, Thursday, 26 November 2009 5:59:18 PM
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