Bayard asked a while ago, "Mark, do you have a handle on whether rising house prices generated Home-Owner-ism or vice versa?"
I had assumed that the two went in tandem - rising prices means that more people 'jump on the property ladder', and the more are 'on the property ladder, the more politicians will do to ensure ever-rising prices to create the illusion of wealth. My Google trawls unearthed a summary of the percentage of owner-occupiers in European countries (table 1, page 49, pdf) and the FT European House price Guide, which gives us nominal price rises between 2000 and 2008, which form the basis of the chart.
To be honest, although there appears to be some correlation, it is not that striking:
Ah well.
Monday 30 November 2009
Damn! There goes another pet theory
Subscribe to:
Post Comments (Atom)
16 comments:
Don't despair. This is where one comes up with good reasons to remove the outliers. Which county is the 20,75 one?
75,20, even
75/19 is Portugal, 30/22 is Switzerland.
Correlation looks quite strong: the horizontal axis is skewed by starting at 20% (Why?): there are hardly any entries for below 50% owner occupation.
Am not keen on the direction you are taking anti-Homeownerism: all this fair-mindedness ,objectivity.
As co-founder I am considering a split with the original anti-Homeonanists forming WHORE World Homeonanist REsistance (Motto Homeonanism or Whore the choice is yours).
It looks like a plausible correlation. Particularly when you realise that Portugal (75%, 19%) has had significant restructuring of its property tax during the period (tax on non-resident entities was doubled to 2% of the Valor Patrimonial in 2002). The introduction of Imposto Sobre Transmissoes and Imposto Municipal Sobre Imoveis in 2003 also may have had an effect, and a comprehensive revaluation has been announced.
Switzerland (30%, 22%) collects much of the economic rent of land, so you might expect less of a bubble there.
So the data are compatible with the case that owner occupation is linked to low ownership taxes (or at least ones which don't correlate well with economic rent), high prices and a tendency to bubble. Isn't this it? Have you calculated correlation/best fit etc?
DBC, I started at 20% because the lowest OO level is in Switzerland at 20%. Best of luck with the militant wing.
AW, yes, of course changes in property taxes have an impact.
We know what happened in the UK after they scrapped Schedule A and Domestic Rates, and conversely Switzerland does have (effectively) a progressive property tax of 1% or so. But Germany has laughably low property taxes (in fact it has subsidies, but it also has very liberal planning laws and no NIMBYs).
In the case of the latter two countries and Austria, I suspect that the low price rises have to do with the fact that homes there were stupendously expensive twenty years ago and everybody else has been playing catch-up.
Intellectually, there is no reason for low taxes to lead to more OO, as low taxes make property more attractive to investors as well. I think it is more the other way round, that high OO levels lead to low taxes, because that's political gold (but economic shite, obviously).
As a counterpoint to homeownerism, wht would be the alternative?
JH, I have no objection to people owning their own homes (rather than being tenants), it does seem a nice way of organising things. What I strongly object to is that the interests of Home-Owners should be placed above all other interests.
The irony is that nearly all Home-Owners are also workers, consumers, taxpayers etc, but they are blind to the fact that qua "Home-Owner" they are shitting on themeselves qua worker, consumer or taxpayer.
"they are shitting on themeselves qua worker, consumer or taxpayer."
But none of us is one without the other except this parasite who has no need to work or pay tax or own a home: he is purely a consumer. As home-owners, tax-payers, consumers and workers we're all juggling our own competing interests. However, I can assure you, that in the London Borough of Haringey anyway, homeowners come a long way down the list of favoured groups. We, together with business rate payers, are on the bottom rung being shat on by those we pay for.
Mark, you say, "The irony is that nearly all Home-Owners are also workers, consumers, taxpayers etc, but they are blind to the fact that qua "Home-Owner" they are shitting on themeselves qua worker, consumer or taxpayer."
Very true - except that they don't even really benefit qua home-owner. Until they die of course. The real beneficiaries of the rising prices are banks.
U, yes I saw that, but who is benefitting more from this arrangement - the asylum seeker (who really oughtn't be housed in such luxury, no dispute there) or the bloke who owns the house and has a mate at the council?
AC, you'd think that the banks are primary beneficiaries of all this, but they lose all their 'money' again when property bubbles burst, so this is all very short-termist.
Isn't HOism mainly fuelled by idiots mortgaging themselves to the hilt to fund general spending rather than house purchase? I can see the urgency of "getting on the ladder" if house prices are rising faster than earnings, but once on the ladder, no-one benefits further from rising prices unless they continue to borrow against their home (apart from the illusion of being wealthier, that is: are people really that stupid?). If this type of borrowing is peculiarly British, then one would expect little Europe wide correlation.
B, sort of.
But for existing owners to bathe in the illusion of ever-rising wealth and dabble in 'mortgage equity withdrawal', it requires an army of FTB's who are also prepared to borrow to the hilt to 'jump on the ladder'.
And yes, people really are that stupid.
It seems to me that case for home ownership is partly that it is a good pension asset, insofar as it is (one of the very few) necessary goods that you can buy in advance of retirement.
M, "... it is (one of the very few) necessary goods that you can buy in advance of retirement."
But a house won't feed or clothe you, will it? You need cash for that. And cash is something else you can save up in advance of retirement.
See also my campaigns for a Citizen's Pension and to allow more social housing to be built
But cash is not the same as food and clothing. It is only a claim on other people's output, whereas it seems to me a house provides a consumption good largely independent of other people (obviously it needs maintenance and running water).
Post a Comment