They're at it again, says Lola who emailed in this from The Times:
Cash handouts for Nimbys would remove obstacle to housebuilding - Mark Littlewood
The eye-watering costs of buying a property have gone untackled for so long that an entire generation of young workers is finding it impossible to get a foothold on the housing ladder, particularly in London and the southeast...
It appears that he is one of the supply siders who subscribe to the "lack of supply" myth. They miserably fails to distinguish between the supply of physical housing and the supply of 'good' locations (primarily high wage areas).
We've plenty of physical housing, and plenty of it is easily affordable, selling for less than or little more than original construction costs. But wages are much lower in those areas, so no real benefit if you buy there (unless you've retired). What we don't have is enough 'good' locations (by definition).
I tried to get a supply sider to address this, of course he side stepped the issue and just said we need more homes in 'good' areas. That doesn't increase the number of 'good' locations, it just makes better use of them! Once you take agglomeration effects into account, the 'good' locations will become even better (and the 'bad' locations even worse), thus cancelling out any downward pressure from additional supply in 'good' areas and leading to higher prices overall.
The Adam Smith Institute have come out with some similar garbage:
* Social tenants eligible for the Right to Buy should be given a Flexible Right to Buy, entitling them to buy a new home, using the value of their Right to Buy discount.
* The tenant’s previous home would then be sold, funding the discount and raising additional revenue.
* A conservative estimate of the impact would see 21,000 tenants take advantage of the scheme with £2 billion of discounts on £9 billion of stock and net receipts of £7 billion.
* An ambitious estimate of the impact would see 197,000 tenants benefit, with £83 billion of stock and £21 billion of discounts and net receipts of £62 billion.
* Housing stock would be better matched to people’s circumstances, with a cooling effect on overheated local markets.
* Some friction would be removed from labour markets, resulting in improved productivity and wages.
Words fail.
Monday 22 October 2018
They [want to] own land! Give them money!
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18 comments:
@"We've plenty of physical housing, and plenty of it is easily affordable, selling for less than or little more than original construction costs. But wages are much lower in those areas, so no real benefit if you buy there (unless you've retired). What we don't have is enough 'good' locations (by definition)."
We could stop paying people who don't work to live in good locations, so freeing up more space in good locations.
First all no housing benefit unless you work 35 hours for zones 1-2.
Not saying I disagree with you
LF, i am dead against housing benefit because it's the opposite of land value tax.
test
Hey! DBCR. Where have you been? I've missed you...
What really gets me is that no-one seems to accept that Housing Benefit is a subsidy to landowners. Now, clearly that's fine with the Tories and Homies, but everyone else?
Reedy come back!
L, it's double think.
Isn't the real problem where reforming/abolishing housing benefit is concerned the fact that the tenants act as human shields for the landlords?
GC, yes.
There is an argument for housing benefit, but only if it is pegged to the level of rents of local social housing: if housing associations can make a profit on those levels of rent, then so can everyone else.
There will always be HB, if only in the form of social housing tenants not having to pay their rent.
@Bayard
There should not be housing benefit in expensive areas or people in cheaper areas will be either
a) paying for others to live where they can't
b) helping landlords
c) a and b
(Depending on someone's view of housing benefit - I think it is c).
@LF for pensioners for sure - of all tenures. Unbelievable that we give people hundreds of pounds off their council tax to live alone (mostly pensioners). No need to be near high wage jobs or desirable schools if you're retired.
For working age people, a lot more tricky. Looking after children is very much hard work and a hefty chunk of children's private property belongs to the state, in effect uncompensated and unrecognised labour. And hard to justify kicking one family with a single homemaker out vs another can stay because it's a two parent family with one staying at home. What if the dad (or mum) is working but doesn't live with them? Or if one of the children works but not the parent, how long do you have to find a job before you get kicked out, etc. Big state welfarism in my opinion.
LVT would sort this out nicely of course - everyone would face the same price signals, and desirable locations outside of cities would be created as they would be ~zero tax on labour and capital.
@" Looking after children is very much hard work and a hefty chunk of children's private property belongs to the state, in effect uncompensated and unrecognised labour. And hard to justify kicking one family with a single homemaker out vs another can stay because it's a two parent family with one staying at home. "
If the one parent family live in an area where I can't afford to live, it would be easy for me.
PS what about people who have long commutes because they can't live near their work? What about their rights to see their family?
I wouldn't kick anyone out - just not give them money and offer them somewhere cheaper.
@MW Does ASI have anything to say about the evidence that H2B has simply pushed up prices? If so, how will the massive increase in demand from their scheme differ?
Far better to shrink the gap between good locations and poor ones via LVT, then not as much to worry about vis-a-vis mismatches.
@LF one of my kid's mates is in a single parent family. We live in a very expensive area but I certainly would not like her to be booted out their home and the school, even if it could reduce my onerous commute. On the other hand there are lots of pensioners in £1m+ family homes in my area who get huge amounts from the state in money and services but by and large do not do much labour, compensated or not.
Coming from South Africa I'm also very wary of creating slums. Look at Paris for another example of cleansing the centre of low income non-homeowners. Unless there's an appetite for eliminating low income jobs from London too, it's a hard sell to force people to sit on a bus for 2 hours a day for minimum wage. I'm happy to sit on the tube for 2 hours a day, but only for my relatively high salary.
Also, what about council housing? It's a great resource in that it pays for itself, so that a low income household costs pretty much the same to house in any part of the country. If we're kicking households out just because they aren't in council housing, shouldn't there be some sort of lottery so that private tenants are on an even footing?
@mombers
I did say
"We could stop paying people who don't work to live in good locations, so freeing up more space in good locations. "
So this
"Unless there's an appetite for eliminating low income jobs from London too,"
Is irrelevant, I am talking about people who don't work at all.
I used to live in an awful flat and nearby in a nice house lived a pro single parent. I was working and she wasn't, I really don't think that is fair. Do you?
@LF, no, a low income person living in a nice house is not fair, regardless of location. That's what council housing is for - cheap, modest accommodation to meet a welfare need. It costs the same to build and run in all parts of the country so no saving to be made by shipping people from one area to another, and avoids the problem of slums to boot.
I think you'll find the problem of low income people over-consuming desirable housing is much, much more prevalent amongst pensioners :-) A decent flat for children is a public investment with great returns (better education and health outcomes), subsidies for pensioners to live in family homes is money down the drain.
@mombers
"It costs the same to build and run in all parts of the country so no saving to be made by shipping people from one area to another"
That can't be true the cost of a plumber in the North East would be cheaper than in Kensington, also the opportunity cost would be much higher in Kensington.
BTW I don't want to ship people from one place to another, just not pay them to live in expensive areas. I can't live near Oxford circus, why should I pay for others to do so or let them have subsidised rent?
Disclaimer I used to work there and I know people who have subsidised rent to live there.
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