Stop blaming supply for expensive housing

By Leith van Onselen

We are continually told by the property lobby and the Coalition that the secret to housing affordability rests in liberalising planning and building more homes.

Australian housing is expensive, we are told, because the planning system is dysfunctional, the states have locked-up land supply, and there has been insufficient investment in infrastructure.

Last week, Dr Nigel Stapledon, Chief Advisor at property advisory consultancy MacroPlan, penned an article once again blaming the supply-side of the housing market on Sydney’s housing woes:

There is an argument out there, which defies the laws of gravity but keeps getting printed in our media, that somehow supply does not matter when it comes to housing.

The report by ex-RBA Governor Glenn Stevens to the State Government earlier this year, provides a very succinct argument on why supply does matter.

Stevens’ report looked at both demand and supply factors, but with reference to Sydney the focus was on supply as the primary fault line…

The Stevens report acknowledges that some things on the supply side are not amenable to change, namely Sydney’s natural geographic constraints.

Other things are amenable to change but slowly. Chief among them is a 20-30 year backlog in investment in transport infrastructure, which is “a critical weakness” in terms of both supply and in explaining the anti-growth views of Sydneysiders…

The primary focus of the Stevens report is on the things “that ought to be more amenable to change more quickly.” He goes on to discuss how regulation, zoning and approval processes make the supply side far less flexible than it could be. Stevens observes that the length of time required for rezoning and development approval is “much too long”, tying up capital which ultimately feeds into the cost of land. Related to that, the complexity of the planning process means that it requires large developers with large resources to navigate that complexity, while small developers would struggle – hardly conducive to a competitive market.

Stevens understands that, if changes are going to be made to the planning process to facilitate growth, the really hard challenge is to sell to the majority of voters the reality that Sydney’s population is going to grow, and that we need to accommodate (not perpetually resist) that growth.

This site has long argued that better land-use and planning would create a better functioning housing market and help to improve affordability (principally by lowering land prices).

However, one wonders how an esteemed professor like Nigel Stapledon can ignore the most obvious cause of Sydney’s (and indeed Melbourne’s) housing woes: the federal government’s mass immigration ‘Big Australia’ program.

Just look at the next chart showing the surge of net overseas migration (NOM) into New South Wales and Victoria (read Sydney and Melbourne) over the past six years:

And compare this to the growth in dwelling values across the five major markets:

You don’t need a PhD to see that excessive demand from immigration has been the primary driver of price growth across Sydney and Melbourne over the past six years, whereas growth in the other capitals – where NOM has fallen – has been weak (negative with regards to Perth).

Indeed, the simplest way to ‘solve’ Sydney’s housing woes would be to slash immigration and allow supply in housing and infrastructure to catch up. After all, the State Government’s own demographic projections show that NOM will account for 88% of the projected 1.74 million increase in Sydney’s population over the next 20 years:

It’s also not like ‘supply’ has been weak. Dwelling construction has hit record levels across Sydney and Melbourne:

And yet this still hasn’t been enough to mitigate price rises given the rampant immigration-fueled population growth.

In summary, commentators like Dr Stapledon need to stop blaming a lack of ‘supply’ for Australia’s housing woes. It is the federal government that has chosen to open the immigration flood gates, leading to massive inflows of new residents into Australia’s big cities (especially Sydney and Melbourne), in the process crush-loading housing and infrastructure.

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Unconventional Economist
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Comments

  1. But it IS possible to have a housing-supply set-up that can cope with any growth! Houston was 4.2 million people in 2000 and is 6.6 million now, and its house price median multiple has never even hit “4”.

    It is not alone among US cities, in having growth rates this high, and having a systemically affordable housing market. Dallas/Fort Worth, Atlanta, San Antonio, Nashville, Indianapolis, Kansas City, Raleigh, Charlotte, no lack of examples.

    • Phil mate, don’t you know you’ve already lost if you bring cold hard logic to an emotive argument, Leiht certainly knows better than to rely on logic to win this battle for Aussie mindshare…it’s an emotive issue so it’ll be won and or lost on gut instincts…to much rational thought just confuses the emotions.

      • If cold hard logic were applied to the housing crisis, NOM would not have just been allowed to increase by 26.9%.
        Current government policy is illogical. It is irrational. It is exactly what the FIRE sector want.

      • I know Leith agrees with me really, but you are quite right, the worst ignorance on this whole issue, from the public, politicians, planning experts, and even economists, relates to the distortions to urban land markets from modern urban planning fads. There is no case able to be made more clearly, yet everyone has their favourite explanation involving something else. All of which are easily rebutted from evidence, of which there is plenty in the global data set of cities and varieties of national-level policies.

        The economics profession is the most culpable one; the problem is that there are thousands of people with Econ degrees who regard themselves as automatic experts in everything, and none of them ever read in depth on 20th-century urban economics insights (Alonso, Wingo, Ratcliffe, etc). Decades of stability led to a loss of attention being paid to this specialty, and the stability that had been introduced by automobile based development came to be taken for granted, and no-one saw that you couldn’t cut off the competitive land supply effect of automobile based development, and keep the cyclical stability.

      • @ Phil “But it IS possible to have a housing-supply set-up that can cope with any growth!”

        Of course it is possible with vertical towers of dogboxes which is what is happening now. So you’re saying we have to forgo the type of housing people (especially families) would prefer and squash into 1 or 2 bedroom badly built apartments just so we can have the “privilege” of mass immigration?

      • Definitely NOT saying that, MD. I listed a number of examples in the USA, and it is definitely NOT vertical dog-boxes that enable systemic affordability. It is ALWAYS the freedom to convert ex-fringe rural land to urban use. The price of this land is so cheap, that as long as it is not gamed and land-banked – which is conditional on there being no regulatory rationing of it – you can have as LOW density fringe development as you like, and the urban-area median multiple will be around 3. It is quite common for new fringe suburbs in the median-multiple-3 cities of the USA, to have 1/2 acre section sizes and the lot prices to still be 1/4 of what you pay for a 1/12 of an acre pocket handerchief section in our part of the world.

        Ironically these cities also usually have a healthy supply of higher-density housing and infill and redevelopment as well, in response to whatever demand there is for it. The cities like Portland that impose arbitrary “Plans” mandating that some significant proportion of new housing will be high-density infill, and ex-fringe development is carefully restricted to keep it in “balance” according to the Plan – end up with a shortfall of everything.

        There is a wealth of information to be gleaned from analyses by this author:

        https://www.buildzoom.com/blog/can-cities-compensate-for-curbing-sprawl-by-growing-denser

      • In fact what I am consistently saying, including on this thread, is that “housing supply” where the average unit size is falling, because of Planning rigging the land market, will always accompany a trend to higher and higher per-unit prices. This is the opposite of what the Planning compact-city Utopians assume, but it is what all the real-life evidence shows. If you plot a data set of major cities by density and average house price, you get Atlanta at one end with 700 people per square kilometer and a median multiple of below 3, and Hong Kong at the other with 26,000 people per square km and a median multiple of over 15. These are not data-outliers, they are right on the ends of the trend line. All the co-called “experts” need to stay in after school and write 1000 lines, “land prices are elastic to allowed density, and the elasticity is exponential”.

      • The other hypocritical thing about “planning” fetishists jumping on Houston, is that THEIR preferred policies ARE responsible for increasing vulnerability to disaster impacts, because of cramming more and more people in, paving over more and more permeable surfaces with “infill development”, and failing (in virtually every case) to actually upgrade the drainage infrastructure to cope. Or you have Christchurch, NZ, where known unstable land that had been leapfrogged by developers for decades, was forced into use by the “compact city” planning ideologues in the Council. Then the whole new suburb had to be written off after the next significant earthquake.

    • What bugs me about this housing problem, is that we can achieve an almost instant fix for the “problem” if we just adjust our Tax system.
      Just create a damn wealth tax and be done with it, that’ll cause an almost overnight fix. With today’s Aussie tax settings personal wealth accumulation practically requires house ownership. Think about the total savings of someone raising a family on the median wage. if they’re lucky they save $10K per year, now compare this with the $50K to $100K net gain (for each house they own) they received each and every year for the last 5years assuming they live in Sydney or Melbourne. The economic incentives are truly that skewed against wages as income and as a bases for “saving”…this is an insane operating corner for any economy and requires urgent attention…taxation policy is the most obvious way to attack this problem but for obvious reasons I won’t hold my breath waiting for these obvious fixes.

      • Patrician, reducing immigration is clearly out of the question – it is a taboo subject.

        I heard Ross Greenwood discussing the price of housing on 3AW last week and wanted to scream at the radio when he said “there is no way for the government to make housing affordable”.

    • Ronin8317MEMBER

      Even if all planning control is removed, what about the infrastructure needed to support the population?

      • That is why I already said, in another comment (below)

        “…As part of the land-supply reform package, there needs to be the ability for private sector actors to do an end-run around public monopoly infrastructure providers if they are acting as de facto rationers of land. The system in most of the US, correlating with the affordable cities, includes the ability to incorporate new municipalities / utilities. People claiming “the free market has failed” when housing bubbles have developed, are utterly wrong when there is no provision of the foregoing kind, for the free market to actually work.

        Much of the Anglo world managed OK for decades even without this incredible market-enabling mechanism because “planners” and all levels of government were pro growth and were enablers and co-operators with the development sector. But that golden era is long gone for a number of reasons; the proven approach from US affordable cities is the one that needs to be learned from now.”

    • “Houston was 4.2 million people in 2000and is 6.6 million now.”
      Err, perhaps Houston is abetter example of what happens when cities / nations are sardined .
      There are hundreds of thousands Houston residents homeless since Hurricane Harvy flattend and flodded he newer parts of the city that had spralwed out over the flood plains.

    • “Houston was 4.2 million people in 2000and is 6.6 million now.”
      Err, perhaps Houston is a better example of what happens when cities / nations are sardined .
      There are hundreds of thousands of Houston residents homeless since Hurricane Harvy flattend and flodded he newer parts of the city that had spralwed out over the flood plains.

    • Phil, I suspect that you believe in growth for growth’s sake, and accept the argument of Gottliebson economics, that whats good for Harry T is the best and only solution to the eclipse of the ‘once in a century’ mining boom, and issues like peak oil and other sustainability issues and liveability don’t apply to the Lucky Country …. I personally think, that despite the 1 in 3 overcast days in Sydney, it has promise of being the world’s biggest rooftop solar farm, and is currently being developed as one of the worlds largest Chinese retirement villages and, Sydney has only scratched the surface of the potential from the cruise ships stimulus to ‘live entertainment’…… so why worry ! These are industries of the future, which don’t need a sophisticated well-educated workforce – just basic language skills like “Yes SIr” in Mandarin.

      • See my comment below quoting data from the Lincoln Institute’s Atlas of Global Land Consumption. The panic about “paving over paradise with urban sprawl” is “sky is falling on our heads” hysterical nonsense that is more suited to pre-enlightenment pagans than to modern society with analytical “see for yourself” tools like Google Earth at everyone’s fingertips.

        In fact the amount of land that was once needed to grow food for horses and draft animals was several times as much as the amount “lost to urban sprawl” since automobiles and trucks put those draft animals into extinction. Source: Robin Best: “Land Use and Living Space”.

  2. Even StevenMEMBER

    Leith – can I suggest you approach Nigel and ask him for a comment? Perhaps you/he would be willing to publish it?

  3. However, as I already said on another thread today, no-one who is trying to shift the blame from “demand” / immigration TO supply, is credibly advocating reforms on the supply side that would have a dog’s show of working; and neither are they even admitting that immigration should be paused while the supply side is sorted out. While I stand by the proven potential for “supply” alone to ensure affordability, I am the first to say that when you have an insane, frenzy-driven bubble in the making like Australia and NZ, you need to do an “all of the above”, all stops pulled out, package of measures. Slash immigration, hike interest rates, impose stiff LVR’s, abolish NG, impose a steep CGT, AND the one essential thing you must include and not repeal, is abolition of regulatory and planning rationing of urban land supply. All the other things, you can repeal when stability has been restored.

    As part of the land-supply reform package, there needs to be the ability for private sector actors to do an end-run around public monopoly infrastructure providers if they are acting as de facto rationers of land. The system in most of the US, correlating with the affordable cities, includes the ability to incorporate new municipalities / utilities. People claiming “the free market has failed” when housing bubbles have developed, are utterly wrong when there is no provision of the foregoing kind, for the free market to actually work.

    Much of the Anglo world managed OK for decades even without this incredible market-enabling mechanism because “planners” and all levels of government were pro growth and were enablers and co-operators with the development sector. But that golden era is long gone for a number of reasons; the proven approach from US affordable cities is the one that needs to be learned from now.

  4. Along with high immigration the “supply” cannot keep up with the foreign demand for our property both new and established. Not only off the plan new homes (FIRB ruling 2009), but through a Proxy they can buy established homes to launder cash. Add to the mix Visa manipulation with a number of Visas including student, investor stream, significant investment and Guardian to buy several new homes or 1 established home for both the guardian and a child as young as 6! Through property purchase a Residency Visa can be gained.
    What is overlooked that unlike America we live on the driest continent on earth with very few rivers crossing it! Our populations are concentrated on the narrow coastal strip with most of Australia being desert country.
    This should be borne foremost in mind because how can further expansion of infrastructure overcome our physical geological restriction! Currently our infrastructure needs are not being met!

    • The Lincoln Institute has published a very through “Atlas of Global Urban Land Consumption”. Using Google Earth imagery.

      Australia is 0.12% “urbanised”; when recalculated as “a percentage of arable land”, this rises to 1.87% urbanised. For the USA the percentages are 1.22% and 6.30%

      Humanity seems to suffer from some kind of massive distortion of perception when it comes to the amount of space taken up by cities.

      For example, the percentages for China are 0.51% and 3.17%. For India, 1.01% and 1.77%. For Indonesia, 0.95% and 5.12%. There is no excuse for people to be ripped off for the price of urban space, even in these countries.

      Really populous nations include Japan: 4.15% and 31.33%; and the Netherlands 10.68% and 38.34%. Both of these countries somehow seem to manage better housing affordability than Australia.

      • Humanity seems to suffer from some kind of massive distortion of perception when it comes to the amount of space taken up by cities.

        This is the graphical example I use:
        Pull up a map of Australia. Note the relative size of Tasmania.
        Now zoom into Tasmania and draw a vertical line about when Hobart and Launceston are.
        The amount of Tassie to the right of that line is about how much space you need to give every household in Australia a quarter acre block.

  5. Demographics > Economics.
    Organic Growth, No/Low Immigration.
    Stop playing God.

    Economists understand the cost of everything and the value of nothing.

  6. Its like driving a car around a tight corner on a wet road at 120kmph and blaming your tyres when you lose control.
    Slow down you idiot

  7. “However, one wonders how an esteemed professor like Nigel Stapledon can ignore the most obvious cause of Sydney’s (and indeed Melbourne’s) housing woes: the federal government’s mass immigration ‘Big Australia’ program.”

    Oh right, and here I was thinking it was interest rates.

    Oops.

    Lower teh rates.

    • It’s like a stupid game – you’re allowed to discuss how to cope with mass immigration but the one thing you’re not allowed to mention is the prospect of lowering immigration, so instead, everyone has to skirt around the issue in some sort of ridiculous dance.

  8. between July 2011 and July 2016 around 200,000 new homes have been built in Sydney. During the same period number of households in Sydney increased by 105,000. At most around 15k homes have been demolished to make space for new developments but that still leaves 80,000 extra empty homes have been built that are not used as primary place of residence.
    In last year alone Sydney population grew by 83k while 60k new homes have been built. Almost one new home for each new resident while average household size is stable at 2.6. It would be enough to built 32k new homes to meet real demand. We built twice as many and couldn’t meed speculative demand for dwellings as investments not dwellings as homes.

    Real demand for homes (homes needed to provide shelter for growing population and shifting household structure) is definitely not driving prices. It’s speculative demand for homes to be used as investment that drives home prices up. This driver has two components a smaller – foreign investors and larger – easy credit

    • It is a fact that “rationed land supply” is a precondition for the kind of speculative mania you describe. As long as land supply for urban growth is rationed, even if the planners end up accused of “releasing too much” after a speculative bubble with over-building has burst (as in Spain, for example), the conditions are present for a speculative bubble.

      The problem is that the planners assume ALL the land within their ration, is for sale to developers. In fact the rate at which farmers sell up, is around every ten to twenty years on average. The fact that cities can be immune to land price gouges, land banking, and speculative frenzy, is because volumes of land able to be developed in leapfrog, splattered patterns, can be sufficient. But as soon as planners start drawing boundaries for, say, “10 years supply of land”, that is actually only 1 year or 6 months worth of land likely to be sold at true rural prices. Portland’s land prices started inflating 3 years after they imposed their famous “20 years growth” boundary.

      Developments often take years, and developers like to secure their next site before they have finished their previous one. In markets without a rationing scheme, they watch rural land advertisements and scoop up farms at true rural prices within driving distance of the city. “Driving distance” on uncongested rural roads is a long way and the volume of land potentially available is a factor of speed, squared, times pi. A LOT of land. Even at Houston growth rates, the volume of land is enough for no land owner to think of holding out and price-gouging, or to think of speculative land banking to be easy money, or speculators to bother with empty houses. There is no other possible explanation for housing being as cheap and stable in price as it is in median-multiple-3 cities.

      We went over and over this in the early days of MB but it is the hardest lesson to get established. Anyone would think there is an establishment that badly wants all solutions except the one that is vital, to be discussed and have its supporters.

      • it is true that restricted land supply helps set investment irrationality but bubbles happen in places with no restrictions as well. Prices in Texas doubled in real terms in just few years when oil money and easy credit driven speculative bubble started. They overbuilt and bubble bursted causing real prices to fall 40% driving insolvencies and bankruptcies.

        in early 2000s Texas avoided property bubble because everyone invested in oil after being burned in Enron case

      • DoctorX, we have been over this a zillion times before.

        Texas NEVER has had median multiples exceeding 4. You can obfuscate all you like using nominal prices and dishonest data like that, omitting the role of income growth and CPI inflation; it does not change that Texas illustrates the right way to do growth. Its “bust” was quickly worked through by median multiples falling to around 2.7 and new household formation and in-migration picking up the slack. You can talk about seemingly volatile percentage shifts in prices, but swinging up to around 3.7 and down to around 2.7 is highly desirable compared to every city sabotaged by central planners, where median multiples always go up to 6 and higher, and have collapsed (eg in LA and SF) from a peak of over 11, to a low of around 4.5.

        It is nonsense to suggest that “speculators avoided TX because of this”, not because its regulatory settings made it pointless to speculate in urban property – how do you explain then that cities outside TX have similarly spectacular growth rates, stable house prices, and an absence of speculation?

        Every good study with explanatory power for house price fluctuations in cities in the USA, has arrived at a formula where “land supply elasticity” is a factor outside brackets that contain “all other factors”. If you have “zero” contribution to price volatility from land-supply elasticity, it basically “zeroes” all the other factors – that are inside the brackets. Mills and Jansen do this; Heeboll and Anundsen do this; Evans and Guthrie do this. Any studies that don’t do this, fail on the “explanatory power”.

  9. Every market that ever bubbled and burst in the past, including our mining towns, Perth, Darwin, the Gold Coast, North QLD, had one thing in common with all the overseas markets incl. Canada; housing shortage due to population growth………SOUNDS FAMILIAR?

  10. It’s all got to do with supply and demand. Supply and demand of capital. Corrupt, ill gotten, stolen, lent, or inherited, it’s all the same. The cries of the forgotten drowned out as the human sewer pipe continues to flow. The blind eye of politicians matters not, as it makes the numbers look good. Growth baby, we gotta see growth.

  11. We are building more dwellings than we ever have in our history by a significant margin.
    Dwelling supply is not the problem

    • There is a difference between “dwelling supply” and having a free market in LAND, where it can freely be converted from one use to another.

      NZ learned something by hard experience in the 1980’s. First the government started tendering off import licenses for imported cars, in response to a speculative frenzy of demand, they increased the volumes of quota being auctioned – loving the windfall revenue. The winners of the import-license tenders got busy bringing cars in, but the prices at which they had to sell them to cover what they had bid for the licenses, ended up leaving them with huge warehouses full of unsold stock, and several of them went bankrupt.

      The the government just abolished licenses altogether and guess what? Popular cars like the Mazda RX-7 and the Toyota Windom that had been listed for sale at >$20,000 suddenly became <$10,000 in perpetuity, and importers competed on price, for volume. Quite different to competing in a gladiatorial bidding war for the "right to import X units" in the first place.

      Do you see any similarities with the quota system for urban land supply and what happens to its prices, even when "units being supplied" look high, possibly even too much?

  12. Leith wonder if we could blame the government for failure of infrastructure supply? If they are going today talk failure of housing supply to deflect blame on housing prices well the same argument applies. Especially as they also control the migration lever which controls loading on that infrastructure … and are judged on per capita living standards at the ballot box. Government has as much longevity as it is prepared to work for.

  13. Dale SmithMEMBER

    Phil has nailed it.

    The key to keeping prices stable is for the supply curve to lie almost in real time on top of the demand curve. As demand goes up supply matches it in real time, and when it goes down it also matches it in real time. When there is a demand on cars, they don’t increase the price, they increase the supply real quick, as they know the reason for the demand is due in part to the price.

    That is the one key ability of states like Texas, is there is very little time lag between demand and supply, there is no bureaucracy trying to ‘process’ the process. All the rules were agreed by the planners decades ago, so their is no need for micro management as they go.

    • Real estate doesn’t work like that. Land is natural monopoly while and why demand is often speculative.

      Texas had it’s easy credit investor driven bubble in 80s combined with excess construction – real prices almost doubled in few years while construction boomed and than prices fell 40%. Now Texas has another bubble turn. Prices in Texas cities increased by 80% since 2011 while construction is skyrocketing. They built record 30k new homes in Dallas last year yet prices went up almost 10%. It’s similar in San Antonio, Austin, …

      More importantly, lets have a look into Sydney, house prices were stagnant in 2011-2013 and while more homes were built than needed, when prices started rising in 2014-2015 construction boomed. Over the last few years we were building 60k new homes in Sydney (twice as many than in Dallas which population is growing at almost double rate 140k per year) yet prices almost doubled.
      Our construction was super responsive and huge during last 5-6 years (200k new homes for 410k new residents in Sydney) yet prices boomed by almost 100%. Compare that to some of the most land restrictive places in US (only 80k new homes gets built in a year in the whole California where population increases by 330k per year). At the same time Detroit house prices almost doubled since 2011 while population was not growing and building is comparable to Dallas (25k new homes per year).

      What this data shows is that real demand (population growth) and supply (number of new homes) has very little to do with price growth. It’s all speculative and dependent on credit availability and expectations.

      • Dale SmithMEMBER

        Real Estate in Aussie, NZ, California, Canada and the UK doesn’t work like that, but its not a Universal Law that it should work like that.

        The way Phil has described it is how it works, if you want it to work like it should ie truly affordable housing.

        And land is no more a natural monopoly than air or water. The monopolies we have are almost entirely made made.

        Having lived and worked in development in Texas in the 80’s I am well aware of the causes of the S&L crisis at the time. And again in the early 2010s.

        Phil’s explained above all the preconditions that need to happen to keep Medium multiples at sane 3 to 4 x income. In spite of the extreme population growth pressures and low interest money available etc. in Texas, they and other similar jurisdictions have kept prices extremely affordable, the main pressures to increasing Texas prices are from the likes of carpet bagging Californian real estate providers trying to in impose their racketing practices.

        It is extremely difficult to make money by property speculation (ie not adding value) in Texas. There is still plenty of money to be made, but you have to add value.

      • DoctorX, the crucial thing is median multiples. We are talking about Sydney, Melbourne and Auckland being over TEN, FFS!!!!!

        And you dribble on making excuses that cities where the median multiple has never gone over 4, are “bad examples”???? Because this, because that; 10% here, 10% there, all nominal prices, no CPI inflation adjusted for, REAL income growth ignored, REAL economic growth ignored????

        And it is not just TX, you ignore pretty much all the Southern and Heartland States; the factor they all have in common, is the freedom to incorporate new municipalities and utilities, raise bonds, and build anything from a small master planned community, to whole new cities, on land that was obtained for $10,000 an acre. And you dismiss this with a bunch of hand-waving nonsense?

        Who are you working for and being paid by?

      • House prices in Texas increased over 66% in real terms in last 6 years or so. Why? They are still affordable compared to Sydney but they are much less affordable than what they used to be 6 years ago.

        There are quite many places in the middle of USA with extremely restricted land supply yet prices don’t go up despite population growth

  14. UNAFFORDABLE HOUSING IS A ‘NONSENSE ISSUE’ … read more at http://www.PerformanceUrbanPlanning.org

    The housing affordability issue really is a ‘nonsense issue’ particularly when the creators of the modern housing production industry, Bill & Alfred Levitt, just after WW11, were supplying new 80 square metre homes on 700 square metre lots for about $US8,000 (about $US100 per square metre building area) to sole income families on about $US3,500 per annum… about 2.3 times annual household incomes (median multiple).

    Just after WW11 there were massive shortages of expensive building products … to the extent the Levitts bought forests and nail factories to ensure they didn’t have supply disruptions to producing about 40 new homes a day.

    A decade or so later … thanks to another great American entrepreneur Malcom McLean creating the modern container industry, dramatically lowering transportation costs and creating greater global competition … we have a growing glut of increasingly affordable products …

    The Story of Malcom McLean … incorporating New York Times video

    http://maritime-executive.com/article/the-story-of-malcolm-mclean

    … Wow … check out the prices of transporting individual items by container ship in this short video … just remarkable … in case you are wondering why our bulk retail outlets are bulging with abundant supplies of extremely low cost goods … thank you Malcom McLean …

    Malcom McLean and Containerisation | Maersk Line – YouTube

    https://www.youtube.com/watch?v=Iq8UU9kafJ0

  15. Lmmao….

    Real Estate Fraud lawyers and agents are only second to vasectomy and micro surgery advertising in Texas.

    disheveled…. who cares about multiples when your property [shoddy built dog box] is constantly under inundation threat…. most are uninsured or soon to be…

    • Pack of lies. It is unaffordable rigged markets that have the shoddily built stuff, people who have seen the houses in the various different markets will tell you that the new TX stuff leaves the new shit from this part of the world for dead. When your $600,000 McMansion is on a pocket-handkerchief section that is $400,000 of the value, there is very little likelihood that your house is superior in quality to something for $300,000 in TX, with $100,000 as the section price. In TX they have got scale economies going in everything, and they compete on value for money for customers, not in trying to outbid each other for sites inside growth boundaries and win “games” involving regulators, lawyers, politicians, etc.

    • And “compact cities” where infill has paved over everything and the original drainage is still what is expected to cope, are better? Your type is so utterly hypocritical. None of your feverish anticipations about Houston are going to come true, but quite a few “compact cities” are going to be write-offs after future natural disasters.

      If anything, it is Houston’s low density, large backyards, nature spaces and abundance of permeable surfaces that you hypocrites hate – and the infill development that you love, that Houston has actually done a bit of, that might have worked against it.

      “…These narratives, alas, are a combination of ignorance, and arrogance that tells the reader more about the narrative spinners’ flawed view of Houston than about the city itself.

      Let’s start with some facts and perspective:

      • Harvey is the wettest storm ever to hit the continental US. Over 50 inches of rainfall and 1 trillion gallons of water fell during the event. No one builds a church for Easter, or a gated community for the zombie apocalypse.
      • So far, there have been fewer than 50 storm-related deaths. Each of these deaths is tragic, but even if that number creeps higher, it is a stunning low fatality rate for such a major event in such a large city. The Houston region has more than 6.6 million people…
      • An estimated 30,000 people have been forced from their homes. This is approximately 0.5% of the population of the Houston region. In other words, 99.5% of people in the Houston region have been able to stay in their homes…

      • if 30,000 people were forced from their home, then probably 70-90% of those homes did not sustain enough damage to force an evacuation – the Houston region has more than 1.6 million housing units, so about 6% of homes sustained damage of some kind…

      • Economic impact estimates are all over the map at this point; initial estimates were in the $30-40 billion range, but have been rising since then. Let’s say they end up being comparable to Superstorm Sandy, which caused about $70 billions of damage in today’s dollars. The Houston region GDP is about half a trillion dollars a year, so Harvey’s economic cost would be about 14% of our total economic output….

      Over an 18 year period, Houston lost about 25,000 acres of wetlands. But this amounts to about 4 billion gallons of storm water detention capacity. As stated above, Harvey dumped about 1 trillion gallons; so the lost capacity represents about of 0.4% of Harvey’s deluge. But it’s also important to understand that the streets – a huge portion of the paved area – are used as detention, places to hold storm water temporarily when there is nowhere for it to drain. Houston’s strategy for many years has been to use streets as detention and runoff channels, the idea being that it is better to flood a street than a house. And the city’s performance under Harvey confirms the wisdom of that strategy…”

      http://www.newgeography.com/content/005730-hurricane-harvey-a-view-a-rugged-communitarian

      • Groan Joel Korkin….

        The guy that wrote the book “TRIBES: How Race, Religion and Identity Are Reshaping the Global Economy” positing, some say advocating for, a stateless, ethnic groups based world and global economy.

        Sounds more like a libertarian utopian ideologue peddling the same quasi academic monkey goo that demographia has for yonks [waves and Hugh]. This is just another think tank pushing its ideological world view and sexing it up as something else.

        Wait till noone will underwrite the dog boxes in Texas or any other free ™ for all state or location, then there is all the infrastructure (especial affluent plants).

        disheveled…. Phil rather than jawbone, live the dream mate….

      • Skippy … In contrast … come over to Christchurch NZ to see what a mess the politicians and bureaucrats have made of the Christchurch earthquakes recovery.

        What should have cost about $NZ25 billion will likely cost about $NZ50 billion … thanks to the low quality urban governance.

        The adjoining smaller and therefore functional units of local government of Selwyn and Waimakariri ‘saved’ Christchurch.

        I have written extensively about the Christchurch recovery circus. Much of it accessible on my archival website http://www.PerformanceUrbanPlanning.org . Check out in particular via the Highlighted Articles Section ‘Christchurch: the Way Forward’ and the hyperlinked articles within it.

        I have enormous admiration for the Houston guys. They are the world leaders in urban governance in my view.

        Houston is very much a ‘Democrat town’. Go check out the current Mayor and all the recent ones as well.

      • Hugh and Phil as your memory’s should remind you, I’ve been in the construction game since the 80s, nationally and international, C/RE and Civil / Industrial. Your grumbling about government on any level is ideological and not evidence based, from M. Friedman supplying propaganda for the developer lobby decades ago, too industry setting the standards or the politicians up to the national level.

        The industry has forwarded an agenda to deskill trades and lower both material and construction standards during this period. The transition from when construction managers ran things to the sales dept was the moment RE stopped being a home to a financial vehicle for leverage and yield seeking. Did you guys miss the entire run up to the GFC or something.

        Just to keep it simple, it costs at least twice the price a sq meter to build a house to the standards w/ fit the finish before this entire episode.

        Hell firemen won’t go on roofs anymore due to the whole thing with gang nails, lmmao most RE is built by apprentices w/ maybe a few roaming journeymen to supervise or fix all the screw ups and at the end of the day its all underpinned by the crappy white good like warranties, which imo are subject to original owner holding periods of 4 to 6 years. Again an industry standard driven occurrence due to demand pull for the FIRE sectors machinations wrt RE MBS et al.

        disheveled… again, aside from the above the whole ideological bias the both of you spruik with massive amounts of Bernays is still dependent on underwriting, now go look at the P/L after just a few events, and the government is looking to end the past involvement in this area, leaving it up to the private sector to hold the bag. Good luck.

  16. Oh I certainly don’t blame supply, I blame the wake of investors with multiple properties who cheerfully sponge up any surplus, cheered on by CGT discounts and NG. Remove those incentives (even just CGT) and watch it unravel.