Up Sucker Creek

Up Sucker Creek
Photo Courtesy of the Lake Oswego Library

Monday, June 12, 2017

Housing affordability a global crisis: Variations on a bad theme

Investigate Demographia.com for a wealth of facts and research on all aspects of demographics.  Site control and much of the research is by Wendell Cox, a Hillsboro, Oregon native.

13th Annual
Demographia International
Housing Affordability Survey: 2017
Rating Middle-Income Housing Affordability 

Australia Canada China (Hong Kong)Ireland Japan New Zealand Singapore UnitedKingdomUnitedStates 


Housing Affordability: A Social Imperative 
Oliver Hartwich, Executive Director, The New Zealand Initiative 

Demographia’s reports and countless other surveys and studies do not leave the slightest doubt that unaffordable housing is almost everywhere and every time caused by the same factor: housing supply restrictions. The more restrictive the market, the more prices will increase over time.

To any undergraduate student of economics, this will not come as a surprise. But it is still a relatively novel discovery for many planners and politicians. 

Fortunately, the media are waking up to the realisation that housing and land supply matters. The most powerful infographic of 2016 was produced by The Wall Street Journal. It showed what happened to house prices in US cities that had expanded their residential areas between 1980 and 2010 – and those that had not.1 As was to be expected, greater land supply went hand in hand with lower price increases.

Senator Bob Day AO 
Senate of Australia  
The distortion in the housing market... resulting from the supply-demand imbalance is enormous ... and affects every other area of a country’s economy. New home owners pay a much higher percentage of their income on house payments than they should.

However, the real culprit ... was the refusal of ... governments ... to provide an adequate and affordable supply of land for new housing stock to meet demand. ... the "scarcity" that drove up land prices is wholly contrived - it is a matter of political choice, not geographic reality. It is the product of restrictions imposed through planning regulation and zoning. 

Dr. Shlomo Angel
New York University
We all understand what it means to prepare adequate lands for urban expansion, enough land to accommodate both residences and workplaces, so as to ensure that land—and particularly residential land—remains affordable for all.

Unfortunately, municipalities of many rapidly growing cities often underestimate the amount of land needed to accommodate urban expansion. In the minority of cases where expansion is effectively contained by draconian laws, it typically results in land supply bottlenecks that render housing unaffordable to the great majority of residents. 

For cities to expand outward at their current pace ─ to accommodate their growing populations or the increased demand for space resulting from higher incomes ─ the supply of land must not be artificially constrained.

The more stringent the restrictions, the less is the housing market able to respond to increased demand, and the more likely house prices are to increase. And when residential land is very difficult to come by, housing becomes unaffordable. 

Alain Bertraud
New York University

It is time for planners to abandon abstract objectives and to focus their efforts on two measurable outcomes that have always mattered since the growth of large cities during the 19th century’s industrial revolution: workers’ spatial mobility and housing affordability.

As a city develops, nothing is more important than maintaining mobility and housing affordability. Mobility takes two forms: first, the ability to travel in less than an hour from one part of a city to another; and second, the ability to trade dwellings easily with low transactions costs. 

Hon. Bill English
Deputy Prime Minister (Now Prime Minister)
 New Zealand
Housing affordability is complex in the detail – governments intervene in many ways – but is conceptually simple. It costs too much and takes too long to build a house in New Zealand. Land has been made artificially scarce by regulation that locks up land for development. This regulation has made land supply unresponsive to demand. 

Robert Bruegmann, PhD
University of Chicago

... I think it is fair to say that a growing number of people who have looked at the figures have tended to agree that a good many well-meaning policies involving housing may be pushing up prices to such an extent that the negative side-effects are more harmful than the problems the policies were intended to correct. 

Joel Kotkin
Chapman University

Although usually thought of as “progressive” in the English speaking world, the addiction to “smart growth” can more readily be seen as socially “regressive”. In contrast to the traditional policies of left of center governments that promoted the expansion of ownership and access to the suburban “dream” for the middle class, today regressive “progressives” actually advocate the closing off of such options for potential homeowners. 

Dr. Tony Recsei
Save Our Suburbs, Sydney, Australia

During the 18th century, especially after the industrial revolution, rural dwellers desperate to make a living streamed into the cities, converting many areas into overcrowded slums. However, as the new economic order began to generate wealth, standards of living improved, allowing an increase in personal living space.

Unless we are vigilant, high-density zealots will do their best to reverse centuries of gains and drive us back towards a Dickensian gloom

Dr. Donald Brash
Former Governor, Reserve Bank of New Zealand

...the affordability of housing is overwhelmingly a function of just one thing, the extent to which governments place artificial restrictions on the supply of residential land.

Australia is perhaps the least densely populated major country in the world, but state governments there have contrived to drive land prices in major urban areas to very high levels, with the result that in that country housing in major state capitals has become severely unaffordable... 


2.2: All Housing Markets

Among the 406 markets, Ireland has the most affordable housing with a national Median Multiple of 3.4 (moderately unaffordable). The United States is second (3.5), followed by Canada (3.9). Japan (4.1), the United Kingdom (4.6) and Singapore (4.8) are all rated seriously unaffordable. The least affordable markets are China (Hong Kong), at 18.1, Australia (5.5) and New Zealand (5.7), both
severely unaffordable (Figure 5 and Table 8).

Among all markets, 99 are affordable (Median Multiple of 3.0 or less). There are 116 moderately unaffordable markets (Median Multiple of 3.1 to 4.0) and 97 seriously unaffordable markets (Median Multiple of 4.1 to 5.0). A total of 94 markets are severely unaffordable, with a Median Multiple of 5.1 or higher.

(Well, at least we aren't as bad as Hong Kong!)

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