Thursday, 13 April 2017

"House prices go up... number of births goes down"

The Daily Mail publishes a summary of some research by the EBRD:

Young couples are putting off starting a family as a result of rising house prices, research shows.

They want a home of their own before they have a baby but face a longer wait before they can afford to buy. A European Bank for Reconstruction and Development study found that for every 10 per cent increase in house prices, the overall birth rate falls by 1.3 per cent.


All of which we knew anyway, it's nice to see somebody putting some numbers on it. This is exactly what the Boomers and Homeys want of course, they need today's adults to be slaving away paying off mortgages and rent, not wasting time bringing up children who will only be of benefit to society after the Boomers are all dead.

... an increase in house prices on that scale could reduce the birth rate by more than 7,000, the figures suggest.

The pattern is the opposite when looking only at those who own their home, with a 10 per cent house price rise causing a rise in the number of births among this group by 2.8 per cent.

Among renters, however, the same increase causes a birth rate decline of 4.9 per cent, bringing the overall national birth rate down.


And why does house price inflation make owner-occupiers have more kids..?

... rising house prices usually mean that those who already own a home have a larger proportion of equity in their home. This may make them feel wealthier and more inclined to have more children, he said.

Newsflash: Rising house prices do not pay off your mortgage for you. You might feel wealthier but you are not.

I accept that having children is a "choice" for the parents, but it is an absolute necessity for a healthy and cohesive society. The only other way to keep things going is to have continual mass immigration, which brings its own problems - more perceived than actual, but problems nonetheless.

Being the Daily Mail, they love the last bit:

The researchers call for the Government to scrap the maximum purchase cap of £250,000 – £450,000 in London – on its Help-to-Buy ISA as the amount may be too low to allow couples to buy a home big enough for a young family.

Aaargh! That is exactly the opposite of what they should be doing! Shifting taxes away from earnings and output to Land Value Tax will sort all this out - it will level the playing field, encourage Poor Widows to sell their Mansion to young couples, increase owner-occupation rates among people of prime child-bearing age (25 to 35), enable people to pay off their mortgages faster etc etc.

[Sadly, the report offers no conclusions as to the correlation between house prices have and the gruesomeness of domestic murders.]
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UPDATE: The actual study (pdf here: www.ebrd.com/documents/oce/shortterm-effects-of-house-prices-on-birth-rates.pdf) does not say who funded it, maybe it was just the EBRD acting instinctively on behalf of banks generally, despite all the evidence pointing the other way.

It kicks off with:

I would like to thank Dan Anderberg, Arnaud Chevalier, Christian Hilber, Melanie Lührmann, Berkay Ozcan and seminar participants at the University of London, Royal Holloway, Royal Economic Society PhD Meetings, 29th ESPE Conference (Izmir, 2015), 30th ESPE Conference (Berlin, 2016) for their helpful comments.

I've never heard of the others, but "Professor" Hilber is the Home-Owner-Ist from Hell, so he might be the one who pushed the author towards the completely 100% wrong final recommendation.

Perhaps we ought to email the author and point out his mistake via aksoyc@ebrd.com

13 comments:

mombers said...

"wasting time bringing up children who will only be of benefit to society after the Boomers are all dead"
You hit the nail on the head. The two child policy just brought in will lead to an increase in child poverty and the associated rise in crime and fall in economic production by underinvestment in children. But by the time that hits, most Baby Boomers will indeed be dead. So selfish.

Bayard said...

"But by the time that hits, most Baby Boomers will indeed be dead. So selfish."

That's one of the problems with democracy. Selfishness is part of human nature. Those in charge will always try and skew things so that they benefit at the expense of those not in charge. However, they are not averse to making sure that everyone else but them is compelled to behave fairly, so the more people you have "in charge" the more have the opportunity to behave in a selfish fashion.

Bayard said...

"The researchers call for the Government to scrap the maximum purchase cap of £250,000 – £450,000 in London – on its Help-to-Buy ISA as the amount may be too low to allow couples to buy a home big enough for a young family."

which lets us know who was ultimately responsible for funding this piece of research.

Mark Wadsworth said...

M, icing, cake, right there on a Boomer plate.

B, for sure, people are selfish, but is that not usually overridden by a sense of 'fairness', even if it is relatively selfish fairness i.e. I want my kids to have the same opportunities as I had? I know that I would love that. That's the whole point of YPP. What is terrifying is that Homeys write off their own children (or get sucked in again via BoMaD).

B, re funding, good point.

Steven_L said...

This is exactly what the Boomers and Homeys want of course, they need today's adults to be slaving away paying off mortgages and rent, not wasting time bringing up children who will only be of benefit to society after the Boomers are all dead.

Besides they can just import lots of impoverished foreigners who will quite happily sleep six to a room in bunk beds whilst working for a fiver an hour, and that'll drive rents up even more, kerching!

Ben Jamin' said...

This economist is saying that high house prices equates to low birthrates?

In his paper he says the UK has the far higher house prices compared to Europe ('cos our planning system stops any houses getting built). So why is our birthrate equal fourth highest out of 26 countries?

While I'm at it, if housing costs are so high in the UK and therefore discretionary income so low, then why have so many people chosen to migrate here compared to say France or Germany? Over double the number on a per capita basis.



Dinero said...
This comment has been removed by the author.
Dinero said...

"if housing costs are so high in the UK and therefore discretionary income so low, then why have so many people chosen to migrate here compared to say France or Germany? Over double the number on a per capita basis."


In accordance with the Georgist analysis the popularity and productivity of a place comes first and the rents come afterwards.

Bayard said...

Din, yes, it's a classic case of correlation is not causality. Higher pay in one area both increases the attractions of moving to that area and hence demand for housing and also puts up rents and hence land prices. So it looks like the higher demand is pushing up prices when they are two separate effects of the same cause.

Mark Wadsworth said...

SL ...and then complain about all the immigrants and vote UKIP.

BJ, he did not say high prices = low rates, he said highER prices = low ER rates. In relative terms the UK's bright rate is higher than other countries for quite different reasons.

And relative to France, we are quite nice to immigrants, France treats them like shit, I met a young couple who'd grown up in France, but their parents were Spanish (on both sides) and they told me even second generation immigrants from SPAIN (I mean, not real proper darkie foreigners or anything) like them are treated like second class citizens. So they came to the UK and did some menial work here.

Din and B, it's not causation and correlation, it is all symptoms or evidence of the same thing. Is it a rainforest because the trees are tall, or do the trees grow tall because they are in a rainforest?
The real underlying thing is agglomeration, which is a mathematical thing. More people, higher densities, higher wages, higher rents etc are all just how we recognise agglomeration effects.

Ben Jamin' said...

"he did not say high prices = low rates, he said highER prices = low ER rates. In relative terms the UK's bright rate is higher than other countries for quite different reasons. "

Fair enough. Just don't compare house prices between countries either then.

Shiney said...

My daughter is working in France right now. Her view...

"Great place to holiday, shit place to live and work".

Mark Wadsworth said...

BJ, I think the study just looked at the UK, it was not an international comparison. I don;t like to compare anything between countries, really, there are just too many variables.

Sh, LOL.