No Generation Rent in #Deutschland! Real housing prices in #Germany, #France & #Italy since 1975

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Source: International House Price Database – Dallas Fed

Note: The house price index series is an index constructed with nominal house price data. The real house price index is an index calculated by deflating the nominal house price series with a country’s personal consumption expenditure deflator.

 

US and UK Real Housing Price Index, 1975 – 2015

image

Source: International House Price Database – Dallas Fed

Note: The house price index series is an index constructed with nominal house price data. The real house price index is an index calculated by deflating the nominal house price series with a country’s personal consumption expenditure deflator.

@metiria @NZGreens child poverty is driven by housing unaffordability – by Green opposition to RMA reform

Nothing much has happening to child poverty before housing costs in New Zealand since the early 1980s. It is after housing costs poverty that is crucifying the children in New Zealand.

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Source: Bryan Perry, Household Incomes in New Zealand: trends in indicators of inequality and hardship 1982 to 2014 – Ministry of Social Development, Wellington (August 2015), Table F6 and table F7.

From HES 2013 to HES 2014 median household income rose 5% in real terms (5% above the CPI inflation rate)…

On the AHC moving line measures, child poverty rates in HES 2014 are around the same as their peak after the GFC. A good amount of the rise from HES 2013 to HES 2014 is due to the large rise in the BHC median, as noted above, rather than a change in the numbers in low income per se.

Bryan Perry (2015, pp. 3, 7).

The parties that oppose measures to increase the supply of land and reduce the cost of housing through reform of the Resource Management Act and its many restraints on the supply of land are the New Zealand Labour Party and New Zealand Greens.

Liberal voting cities markets have higher income inequality and worse affordability

All homeowners have an incentive to stop new housing because if developers build too many homes, prices fall, and housing is many families’ main asset. But in cities with many Democrats and Green Party members, environmental concerns might also be a factor. The movement might be too eager to preserve the past.

Matthew Kahn

via Why Middle-Class Americans Can’t Afford to Live in Liberal Cities – The Atlantic.

I’m worried! I’m sympathising with organic farmers over a land use conflict!

Writing this blog of sound mind and sober disposition, I still have considerable sympathy with two organic farmers over a land use conflict they have with the neighbouring gun range.

blackstone nuisance

Local land use regulations allows a gun club to set up 600 m away with competitive shooting days all day for 88 days a year. That is a voluntary self restraint. They could hold shooting competitions every day of the year. The local land use regulations allow the use of guns on rural land. The gun club used this absence of a prohibition on the use of guns in the frequency of use to set up a gun range to fire guns all day long on rural land.

Now here is the rub. There something wrong with the concept of quiet enjoyment of your land if a neighbour can fire off a large amount of noises continuously. The occasional noise, the occasional gunshot yes, but all day? I live near the airport, but I knew it was there when we bought the property and the lands  was a little cheaper because of that.

https://youtu.be/34azi8qkiRs

The organic farmers are unusually pristine and prissy about what they want by neighbours to protect the sacredness of their more expensive snob food. I’m not too sure whether they would want to grant their neighbours an equal right to unusual land uses such as opening a gun range. That said, the organic farmers do have a point about a very noisy neighbouring land use that can be heard some distance away.

The organic farmers, of course, could have negotiated with their neighbours for covenants to restrict land use that undermine there are unusually pristine requirements for quiet enjoyment of their land and their neighbours land too. Easy to do when the land is first unused, but once economic activity accumulates, not so easy in terms of  transaction costs and hold-outs.

HT: Environmental Law 101 | Hoover Institution.

William Blackstone on the Resource Management Act (RMA)

blackstone nuisance

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NIMBY: Where, When, And to Which Developers It Happens in the USA

via NIMBY: Where, When, And to Which Developers It Happens — Rooflines.

Has NZ child poverty doubled as @MaxRashbrooke said?

Lindsay Mitchell put me onto a quote by veteran grumbler Max Rashbrooke that the child poverty rate doubled in New Zealand:

In a system where income goes disproportionately to the already well-off, ordinary workers are missing out on the rewards of their efforts, to the tune of billions of dollars a year. Welfare benefits, cut by a quarter in 1991 and increased just 8 per cent in the last budget, are far too low to meet people’s basic needs.

The result is a doubling of child poverty and the return of childhood diseases unknown in most developed countries – a national embarrassment, as one researcher described it.

Poverty, income and inequality data is collected in loving detail by Brian Perry every year for the Ministry of Social Development.

Figure 1: % child poverty in New Zealand (before and after housing costs), 60% 1998 median constant value, 1982 – 2013

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Source: Bryan Perry, Household incomes in New Zealand: Trends in indicators of inequality and hardship 1982 to 2013. Ministry of Social Development (July 2014), Tables F.6 and F.7.

The only thing noticeable in the downward trend in child poverty in New Zealand since its doubling with the sharp recession in 1990 with double-digit unemployment rates is child poverty stop falling shortly after in-work family tax credits were introduced in the form of Working for Families in 2005.

There was a break in trend in the long decline in child poverty as soon as in-work family tax credits were introduced in New Zealand. I’m sure this is a coincidence because, as Brian Perry said when discussing the introduction of Working for Families in 2005:

The 2004 to 2007 period was the only one in the 25 years to 2007 in which the incomes of low- to middle-income households grew more quickly than those of households above the median.

The real killer in New Zealand in terms of poverty and inequality are housing costs. Housing costs are wholly under the control of government through its control of the supply of land, which is restricted at the behest of the parties of the left.

Figure 2: real equivalised household incomes (before and after housing costs): changes at the top of lowest income decile, New Zealand, 1982 to 2013

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Source: Bryan Perry, Household incomes in New Zealand: Trends in indicators of inequality and hardship 1982 to 2013. Ministry of Social Development (July 2014), tables D.2 and D.4.

Figure 2 shows that real equivalised household income after housing costs has not grown and in fact has fallen for the bottom 10% of the income distribution in New Zealand.

It is the left-wing parties who oppose measures to reduce housing costs and and increase the supply of land through reforms to the Resource Management Act and the relaxation of the Auckland metropolitan urban limit.

Labour and the Greens are in effect keeping the poor poor to win middle-class votes.

Figure 3: real equivalised household incomes (before and after housing costs): changes at the top of the top, middle and lowest lowest income deciles, New Zealand, 1982 to 2013

image

Source: Bryan Perry, Household incomes in New Zealand: Trends in indicators of inequality and hardship 1982 to 2013. Ministry of Social Development (July 2014), tables D.2 in D.4.

Figure 3 shows that those in the middle and higher deciles, a political territory rich in swinging voters, are still doing well after housing costs. The parties of the left are collaborating with a middle-class home owning voter while betraying the working class and its aspirations from home ownership and quite simply affordable housing costs when they rent.

The increases for all groups may be understated by the inability of living standards measures to adequately account for new goods, product upgrades and rising life expectancies.

Auckland housing is more expensive than many big US cities

The decline of home ownership in the USA

This Eco-Friendly Capsule Home Would Let You Live Off The Grid Anywhere In The World?

I doubt that it would get planning permission in either Auckland and Christchurch?

It is hard to get local government land use permission to build new granny flats and other small and temporary accommodation units in Auckland and Christchurch.

Auckland has rapidly increasing housing prices. Christchurch is still rebuilding after an earthquake so both housing prices and rents in particular are skyrocketing. The local councils in both cities are strict regulations restricting or prohibiting high-density housing.

via This Eco-Friendly Capsule Home Would Let You Live Off The Grid Anywhere In The World | IFLScience.

Land use regulation knocks 10 points of US GDP!

Bloomberg Business highlighted a great new study by Enrico Moretti on power of the regulatory restrictions on land supply to destroy wealth.

Moretti focused on the impact that restrictions on land supply have on the ability of workers to move to higher productivity cities. Moretti is the second best urban economist working at the moment. The best is Ed Glaeser. Moretti concluded that

A limited number of American workers can have access to these very high-productivity cities

He concluded that a more efficient distribution would be “a general benefit for the entire economy.”

The secret of his analysis was to look at how different US cities, the high productivity cities, contributed to national economic growth. He then explore the implications of fewer and fewer workers been able to move to these cities to take advantage of the great productive potential. The barrier to them moving was high housing prices and high rents.

For example, labour productivity grew quickly in San Francisco, New York and San Jose overt 45-years. All of these cities are famous for their human capital-intensive industries including technology and finance. These cities weren’t America’s growth engine:

The reason is that the main effect of the fast productivity growth in New York, San Francisco, and San Jose was an increase in local housing prices and local wages, not in employment.

Despite the large difference in local GDP growth between New York, San Jose, and San Francisco and the Rust Belt cities, both groups of cities had roughly the same contribution to aggregate output growth.

The drivers of US growth between 1964 and 2009 were southern U.S. cities and 19 other large cities. These cities attracted many residents because of good weather and abundant supply of cheap housing.

The lesson both the US and for New Zealand, and Auckland in particular, is this reallocation of population away from the expensive cities with restricted land supply reduced national output because these population movements bring workers to cities "where the marginal product of labour is low."

In a technology boom town such as San Francisco, it is now what like New Zealand will be as Generation Rent runs its course – 65% of residents are renters:

Over the past year, the City and County of San Francisco boasted the second strongest labour market in the nation, adding 25,000 new jobs. Yet only 2,548 new housing units were permitted and even fewer were built.

Just think: 25,000 new workers and their families have been knocking on San Francisco doors, but there are new units for less than 10 percent of them. It is not surprising that apartment prices get bid up.

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