3 thoughts on “On housing and avocados: why Tim Gurner is wrong”

  1. Posted 31/05/2017 at 23:12 | Permalink

    Kristian, you say housing issues are a supply side problem. However a 100% tax on the rental value of land under UK housing (initially raising about £200bn pa) would move the demand curve over to the left.

    Could you please comment on how this would affect the following ?

    1. House prices and rental incomes.
    2. Housing affordability as measured by ratios of discretionary incomes to selling prices/rents (for typical working households).
    3. The allocation of existing housing stock.
    4. Regional tax liabilities.
    5. Its effect on reducing urban sprawl, and thus the need for Greenbelt regulations.
    6. The incentives it would give to the State to get the correct balance between development and restrictions.
    7. The effect on the wider economy of using such revenues to eliminate other taxes.
    8. And NIMBYism, of course.

    Finally, shouldn’t policy recommendations be based purely on cost reduction? In which case, does increasing housing supply or reducing demand add or subtract costs? I’m not saying the UK doesn’t need to be building houses, only perhaps we should sort out the demand side first, and then see if there is still a problem. What do you think?

  2. Posted 01/06/2017 at 15:10 | Permalink

    There is slightly more to it than this. If there is a fixed supply of houses and they were all priced at £50,000 (because the supply was huge) and the young never saved a bean, they would not own houses either. It is, as you note, very, very difficult to save for a house deposit, but the less housing market purchase activity there is amongst the young the fewer houses are transferred from the old to the young or from the rented sector to the owner-occupation sector. Or, to put it another way, owners are not heterogeneous.

  3. Posted 12/06/2017 at 07:35 | Permalink

    Your post is such amazing for me. I want your help can you please comment on how this would affect the following?

    1. House prices and rental incomes.
    2. Housing affordability as measured by ratios of discretionary incomes to selling prices/rents (for typical working households).
    3. The allocation of existing housing stock.
    4. Regional tax liabilities.

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