Pericles,

The wage/land equivalence example provides a great insight into the huge inequality present in Bangladesh. Btw, the Aussie equivalent average high price for an acre of land is about 800 million AUD.

Thanks for the articles. The first makes the point that immigration will not solve the aging population problem. The pension fiasco in Japan I have heard of. One poor bugger was asked to provide receipts for superannuation payments he made as long ago as the early eighties.

Do you really see impending doom from an aging population? Substitute global warming for aging population and you are just another doomsayer to me. Whatever happened to technical solutions, or do they only count for solving the problems of a growing population?

Now you have totally confused me Fester. Not difficult, I know, but this does seem to me to be a total backdown on your part.

>>the Aussie equivalent average high price for an acre of land is about 800 million AUD<<

Is this in support of your original point that:

>>Bangladesh has... some of the highest land values in the world<<

But we appear to have strayed from the point, which was the affordability of housing in Australia. I proposed that:

"If people cannot afford to buy houses, the price will fall... [and] when people can afford to buy houses, the price will increase"

grputland offered this in response:

>>There are two problems with Pericles' analysis.

First, it ignores the supply side. If accommodation is plentiful relative to need, buyers/renters will pay high prices/rents relative to their spending power. If accommodation is scarce relative to need, buyers/renters will pay low prices/rents relative to their spending power.

Second, it ignores differences in spending power. To get the house, you have to be the highest bidder. As accommodation becomes scarcer, the number of bidders increases, and you need more spending power to have a reasonable chance of being the highest bidder.

Pericles asks: "If people cannot afford to buy houses, the price will fall. Agreed?" Not if they can't afford it because they're outbid!<<

I'll be charitable, and pretend the first argument is the other way round, which would be more logical. The second simply says that rich people can afford bigger houses than poor people, which is hardly illuminating. What it doesn't dispute, is that every time a house is bought, it is by definition affordable.

Now, if you were to suggest that “it is only affordable because the Banks lend so much money”, you would be closer to a valid proposition.

But your measure of affordability would then be “housing loan defaults”, which are still – by and large – within reasonable limits.

Property prices are, and will remain, subject to the laws of supply and demand.

A house is affordable if someone buys it.

Pericles

Yes, Bangladesh does have dollar a day labourers and some of the world's highest land values. It is supply and demand in action. The result is that people adjust their means and live in shanties of a few square metres.

In Australia we are seeing the effect of increasing demand via high immigration and restriction of supply. I know many people who would subdivide in a flash were it not for difficult local authorities. The sentiment is unanimous that the local authorities are more interested in preserving the easy money for their mates than they are in solving any housing affordability crisis.

You said it yourself when you pointed out that you could fit 6 1/2 billion people on good sized blocks in the state of Texas. The PM could rapidly end the affordability crisis by usurping local government's corrupt control of urban housing density. Cutting immigration would drop house prices fast also, but this would only happen soon if a capital city ran out of water. In the face of such catastrophe it would be hard to sell immigration as economically beneficial.

Perils of incomplete editing...

I wrote: "If accommodation is plentiful relative to need, buyers/renters will pay high prices/rents relative to their spending power. If accommodation is scarce relative to need, buyers/renters will pay low prices/rents relative to their spending power."

Uh, yes, that should have been the other way around.