Friday, 21 October 2016

Von Thünen's Law of Rent in action...

From The Telegraph:

House price growth at stations on Southern Rail's routes has ground to a halt as strikes by the RMT Union continue to make commuters' lives a misery.

New research by the online estate agency HouseSimple found that properties on the Brighton Mainline, Mainline West and East routes have fallen in value by an average of 0.4pc, losing £1,875 in value in the last three months.

This is not due to a general slump in house prices in the area during a traditional summer lull: in the south-east of England, house prices have risen on average 2.4pc between June and August, according to the Land Registry.

Von T's rings assume constant travelling speed (in the days of horses and carts) so it is only distance that matters; what actually matters is time, cost and hassle, so if a train service is less reliable, that is effectively further away from The Centre.

Right at the end there's a nice bit of Home-Owner-Ist double counting:

Alex Gosling, chief executive of HouseSimple, said: “House prices along Southern Rail routes haven’t gone into freefall just yet, but these figures do suggest that the ongoing dispute is hurting local property markets.

"It would be a real kick in the teeth if homeowners, who have had to endure the daily misery of train delays, cancellations and strike action, started to see the value of their homes falling because of the RMT and Southern Rail’s inability to reach a deal."

The amount by which rental values (and hence house prices) fall is not in addition to the grief and hassle, it is the market's estimate of the cost of the grief and hassle.


ThomasBHall said...

Perhaps southern rail should be forced to pay homeowners compensation

mombers said...

A rare situation where renters might come out relatively better than homeowners. Rents will struggle to increase at the same pace as similar areas that are unaffected, whereas landowners don't get a reduction in their costs because there's no tax on rents to reduce.

Mark Wadsworth said...

TBH, no, they should pay the poor commuters compensation.

M, we'd have that with LVT of course, but that goes against Homey DoubleThink "if prices go up its due to our wise investment and shouldn't be taxed; if prices go down it's somebody else's fault and we demand comp."

Lola said...

It just all gets madder by the day, doesn't it? Surely God more people must start questioning the Emperors new clothes soon? Surely?

Mark Wadsworth said...

L the irony is that Homeys and Georgists agree on the significance of "location value" and what or who creates it. They merely disagree on who it belongs to.