Well said.

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 http://www.parliament.vic.gov.au/osisdc/inquiries/UrbanGrowthBoundary/submissions.html).

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,

http://lanekenworthy.net/2008/03/09/the-best-inequality-graph/

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.

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!

continued

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.

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.

http://www.abc.net.au/news/opinion/emails/ 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 http://www.pc.gov.au/__data/assets/pdf_file/0016/56302/housing.pdf

2008 Senate report HOUSING AFFORDABILITY - Executive Summary http://www.aph.gov.au/Senate/committee/hsaf_ctte/report/b01.ht

Ultimately this is just another load of misguided and misrepresentative crap, no different another recent thread regarding housing affordability.

The purchase price : income ratio is no guide to “affordability”

Affordability is only determinable after the interest cost is included,

because

the vast majority of houses are purchased using borrowed money in the form of an interest bearing mortgage

and

at an average rate of 10% interest pa, a 30 year constant repayment loan (the usual sort) the interest burden will represent 68.3% of total all repayments

or even

at an average rate of 6% interest pa, a 30 year constant repayment loan (the usual sort) the interest burden will represent 53.5% of total of all repayments

pretending that, for some reason, the ratio between a median house price to the buyers income is the only factor to be considered in "affordability" is the deceptive product of either spindoctor cynicism or moronic stupidity

either way, neither is a justification for perpetrating a lie

further, whilst banks continue to lend on the basis of around 50% of after tax income or 30% pretax income (as has been their practice for decades, with no indication of future change), the notion that there will be a difference, over time between housing affordability for the next generation from the current is complete and utter garbage.

Prices of housing go up and down, in response, not just to household incomes nut also because of interest rates, which keep “affordability” as more a constant than the "variable", which is hypothesized here.

The data sources here are also doubtful.

I lived just outside the DFW metropolis in 1999-2001, the population was over 10 million, not the 5.5 million used in this blatant exercise in emotional puerility.

Another factor everyone must consider is

the US has a recent history of “jingle mail” which has depressed recent housing prices and caused a financial crisis.

The influence of such laws, which were not been enacted in Australia do influence international comparisons, especially price trends over time, between Australia and USA,

further invalidating the simplistic assertions of the article.

At the risk of sounding nostalgic, when we bought our first home way back in the late 20th Century, we were lucky enough to have saved enough to buy a new one.
It was an 11-square uncarpeted spec-built Hardiplank cottage in the middle of a sea of mud. No garage or even a clothesline, we baked through the summers and froze through the winters.

Now I see young couples buying new brick houses as their first home - fully landscaped, air conditioned, double garage and with "nothing to spend".

That's where the crippling debt burden starts.

Although nobody builds the cheaper alternative any more, living beyond your means - no matter how attractively the idea is marketed - is still a personal choice.

It's a creditable aspiration but the notion of home ownership has never been "a right" in any society.

wobbles,

I must admit, i am sick and tired of hearing "we lived in a 2ft by 3ft home back in my day" and "it had a straw roof"...geez cmon. I am a gen y and am ashamed of what the housing industry has become, the reason us "youngies" live in these big brick homes is because a 30 yr old brick may only be 20,000 more affordable and; im quite sure we would like to put a $30,0000 barn shed on a block in suburbia (to get into the market) but we simply arent allowed to (government/developer restriction). So. if we want our first home ever, we are forced to buy a ridiculously overpriced block and a home that "fits in " ......its all bull and will certainly lead to social problems.

I will not lock myself into a 400+ p/w mortgage for 30+ yrs, the baby boomers didnt have to so why should I?

The truth is Wobbles and whoever else reads this is that the younger generations (majority anyway) dont want it all, all we want is a place to call our own, to paint, to do the gardening and to hang pictures on a wall. thats all, but it is made impossible.

Thats all i have to say.