{"id":6982,"date":"2013-03-15T07:53:36","date_gmt":"2013-03-15T11:53:36","guid":{"rendered":"http:\/\/goldstocksforex.com\/?p=6982"},"modified":"2013-03-15T07:53:36","modified_gmt":"2013-03-15T11:53:36","slug":"what-australia-needs-is-lower-land-prices","status":"publish","type":"post","link":"https:\/\/thepatientinvestor.com\/index.php\/2013\/03\/15\/what-australia-needs-is-lower-land-prices\/","title":{"rendered":"What Australia needs is lower land prices"},"content":{"rendered":"

Australia enjoyed a mining boom over the last ten years but now faces a fall-off in capital expenditure on new projects as commodity prices fall. The RBA, eyeing the coming slow-down with some trepidation, is hoping that housing construction recovers to fill the void. So far the housing market has failed to respond to lower interest rates.<\/p>\n

\"Housing<\/p>\n

The reason that the housing market has not reacted to lower rates is partly attributable to housing affordability, with household debt in the last 20 years having trebled as a ratio to disposable income.<\/p>\n

\"Housing<\/p>\n

The uncertain financial climate has also contributed, with households repaying debt rather than looking for new homes.<\/p>\n

\"Household<\/p>\n

Further cuts in interest rates will not help. Encouraging home buyers to enter the market at unsustainably low interest rates would exacerbate the housing bubble and cause further hardship when rates rise. Rather than monetary policy, we need changes at federal, state and local government level to increase the availability of land for housing.<\/p>\n

    \n
  1. Abolish transfer duties<\/strong>
    \nAbolishing transfer duties on property would encourage home-owners to re-size as their needs change, releasing more housing stock into the market. Abolishing transfer duties would also remove state support for higher property prices. Under a transfer duty, higher prices boost state revenues, encouraging support for property developers who land-bank large tracts of land and restrict their release to maintain high prices.<\/li>\n
  2. Replace with a land tax<\/strong>
    \nReplacing transfer duties with a land tax, based on the value of the land, would also discourage land-banking by property developers. Restricted release of land is the primary cause of unaffordable housing in both Australia and the UK<\/a>.<\/li>\n
  3. Overcome zoning issues<\/strong>
    \nZoning issues at state and regional level may also contribute to the slow release of new land for development.<\/li>\n
  4. Reduce infrastructure costs<\/strong>
    \nCosts of new infrastructure development are another reason local government tends to restrict release of new land for housing development.  Establishment of municipal utility districts (“MUDs”) within a local government area would help to overcome this.     Leith van Onselen<\/a> describes how MUDs  in Texas, ranging in size from 200 to 5000 hectares, charge home-buyers a monthly infrastructure levy rather than requiring up-front payment for establishment of new services — which is then folded into the purchase price. The MUD levy expires when bonds used to finance the services have been amortized, or residents can decide to continue the levy to upgrade public amenities such as parks, swimming pools and other facilities.<\/li>\n<\/ol>\n

    Increased availability of land would drive down new house prices and encourage the establishment of new households. This would boost not only housing construction, building materials and general construction — through establishment of roads and services — but the retail sector as well, because every new home needs to be furnished. New jobs in these sectors would lift general consumption and the broader economy, helping Australia to avoid the approaching mining cliff<\/em>.<\/p>\n","protected":false},"excerpt":{"rendered":"

    Australia enjoyed a mining boom over the last ten years but now faces a fall-off in capital expenditure on new projects as commodity prices fall. The RBA, eyeing the coming slow-down with some trepidation, is hoping that housing construction recovers to fill the void. So far the housing market has failed to respond to lower … <\/p>\n

    Continue reading “What Australia needs is lower land prices”<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_mo_disable_npp":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[40,5],"tags":[2064,2065,2388,3467,3746],"class_list":["post-6982","post","type-post","status-publish","format-standard","hentry","category-australia-nz-countries-regions","category-economy","tag-land-release","tag-land-tax","tag-municipal-utility-districts","tag-transfer-duty","tag-zoning"],"yoast_head":"\nWhat Australia needs is lower land prices - the patient investor<\/title>\n<meta name=\"robots\" content=\"noindex, follow\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"What Australia needs is lower land prices - the patient investor\" \/>\n<meta property=\"og:description\" content=\"Australia enjoyed a mining boom over the last ten years but now faces a fall-off in capital expenditure on new projects as commodity prices fall. 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He founded PVT Capital (AFSL No. 546090) in May 2023, which offers investment strategy and advice to wholesale clients.","sameAs":["https:\/\/facebook.com\/people\/The-Patient-Investor\/61572934660810\/","https:\/\/www.instagram.com\/colin_thepatientinvestor","https:\/\/au.linkedin.com\/in\/colintwiggs"],"url":"https:\/\/thepatientinvestor.com\/index.php\/author\/investor\/"}]}},"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/p9tQ4n-1OC","jetpack_likes_enabled":false,"jetpack-related-posts":[{"id":5846,"url":"https:\/\/thepatientinvestor.com\/index.php\/2012\/10\/25\/australia-rba-running-out-of-options\/","url_meta":{"origin":6982,"position":0},"title":"Australia: RBA running out of options","author":"Colin Twiggs","date":"October 25, 2012","format":false,"excerpt":"The Reserve Bank of Australia must be viewing the end of the mining boom with some trepidation. Cutting interest rates to stimulate new home construction may cushion the impact, but comes at a price. Consumers may benefit from lower interest rates but that is merely a side-effect: the real objective\u2026","rel":"","context":"In "Australia & NZ"","block_context":{"text":"Australia & NZ","link":"https:\/\/thepatientinvestor.com\/index.php\/category\/countries-regions\/australia-nz-countries-regions\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":5384,"url":"https:\/\/thepatientinvestor.com\/index.php\/2012\/09\/04\/australia-housing-market-weakens\/","url_meta":{"origin":6982,"position":1},"title":"Australia: Housing market weakens","author":"Colin Twiggs","date":"September 4, 2012","format":false,"excerpt":"Housing credit growth is at its lowest level in over 30 years: lower than the dip of the early 1980s and the crash of 1987. The current rate of growth is barely sufficient to match already depressed construction rates for new homes*. The decline should see a gradual softening of\u2026","rel":"","context":"In "Australia & NZ"","block_context":{"text":"Australia & NZ","link":"https:\/\/thepatientinvestor.com\/index.php\/category\/countries-regions\/australia-nz-countries-regions\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":38974,"url":"https:\/\/thepatientinvestor.com\/index.php\/2022\/11\/22\/australias-debt-end-game\/","url_meta":{"origin":6982,"position":2},"title":"Australia’s debt end game","author":"Colin Twiggs","date":"November 22, 2022","format":false,"excerpt":"We are nearing the end of a thirty year bull market in credit, during which time the overnight cash rate in Australia fell from 18% in 1989 to 0.03% in 2021. Low interest rates enabled households to borrow more relative to their income, with housing debt expanding 4.5 times, over\u2026","rel":"","context":"In "Australia & NZ"","block_context":{"text":"Australia & NZ","link":"https:\/\/thepatientinvestor.com\/index.php\/category\/countries-regions\/australia-nz-countries-regions\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":9323,"url":"https:\/\/thepatientinvestor.com\/index.php\/2014\/03\/03\/deflating-australias-land-bubble\/","url_meta":{"origin":6982,"position":3},"title":"Deflating Australia\u2019s land bubble","author":"ColinTwiggs","date":"March 3, 2014","format":false,"excerpt":"Great post by Leith van Onselen Reproduced with kind permission from Macrobusiness.com.au. Prosper Australia has provided a submission to the Senate Inquiry into Housing Affordability, which is well worth a look. The submission first provides nine metrics illustrating Australia\u2019s residential property bubble, which include the following: It took forty years\u2026","rel":"","context":"In "Australia & NZ"","block_context":{"text":"Australia & NZ","link":"https:\/\/thepatientinvestor.com\/index.php\/category\/countries-regions\/australia-nz-countries-regions\/"},"img":{"alt_text":"ScreenHunter_18 Jul. 05 10.22","src":"https:\/\/i0.wp.com\/www.macrobusiness.com.au\/wp-content\/uploads\/2014\/03\/ScreenHunter_18-Jul.-05-10.22-200x200.gif?resize=350%2C200","width":350,"height":200},"classes":[]},{"id":7386,"url":"https:\/\/thepatientinvestor.com\/index.php\/2013\/04\/01\/has-australia-hit-the-floor-with-interest-rates\/","url_meta":{"origin":6982,"position":4},"title":"Has Australia hit the floor with interest rates?","author":"ColinTwiggs","date":"April 1, 2013","format":false,"excerpt":"Izabella Kaminska made a strong argument on FT Alphaville last year for the RBA to lower interest rates and weaken the Australian Dollar to protect manufacturing and export industries: Australia\u2019s current account deficit coupled with a deeply negative net external debt position both provide strong fundamental impetus for currency weakening.\u2026","rel":"","context":"In "Australia & NZ"","block_context":{"text":"Australia & NZ","link":"https:\/\/thepatientinvestor.com\/index.php\/category\/countries-regions\/australia-nz-countries-regions\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":41226,"url":"https:\/\/thepatientinvestor.com\/index.php\/2023\/03\/14\/volatility-how-does-australia-compare\/","url_meta":{"origin":6982,"position":5},"title":"Volatility: How Does Australia Compare?","author":"Colin Twiggs","date":"March 14, 2023","format":false,"excerpt":"Last week we covered suppression of volatility in complex systems and showed how Fed suppression of interest rate has destroyed productivity, causing debt to grow at a faster rate than GDP. Quick Recap The ratio of federal government debt increased to a precarious 121% of GDP at the end of\u2026","rel":"","context":"In "Australia & NZ"","block_context":{"text":"Australia & NZ","link":"https:\/\/thepatientinvestor.com\/index.php\/category\/countries-regions\/australia-nz-countries-regions\/"},"img":{"alt_text":"Federal Government Debt & Non-Financial Private Debt\/GDP","src":"https:\/\/i0.wp.com\/www.incrediblecharts.com\/images\/2023\/2023-03-07-debt-gdp.png?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.incrediblecharts.com\/images\/2023\/2023-03-07-debt-gdp.png?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.incrediblecharts.com\/images\/2023\/2023-03-07-debt-gdp.png?resize=525%2C300&ssl=1 1.5x"},"classes":[]}],"_links":{"self":[{"href":"https:\/\/thepatientinvestor.com\/index.php\/wp-json\/wp\/v2\/posts\/6982","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/thepatientinvestor.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/thepatientinvestor.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/thepatientinvestor.com\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/thepatientinvestor.com\/index.php\/wp-json\/wp\/v2\/comments?post=6982"}],"version-history":[{"count":0,"href":"https:\/\/thepatientinvestor.com\/index.php\/wp-json\/wp\/v2\/posts\/6982\/revisions"}],"wp:attachment":[{"href":"https:\/\/thepatientinvestor.com\/index.php\/wp-json\/wp\/v2\/media?parent=6982"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/thepatientinvestor.com\/index.php\/wp-json\/wp\/v2\/categories?post=6982"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/thepatientinvestor.com\/index.php\/wp-json\/wp\/v2\/tags?post=6982"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}