Speculative land rationing our opportunity
Property lobby pushes all the usual red herrings whilst ignoring the speculative causes to affordability pressures.
Demographia International’s new report on housing affordability again pushes the “unending sprawl forever” mantra. Report author Wendell Cox rolled out all the usual criticisms of land rationing, infrastructure charges and bureaucratic tape.
“The effect of unending sprawl is to stretch government finance such that public infrastructure suffers throughout the city. The resultant doughnut development sees slum pockets develop throughout the city, breeding crime” stated Bryan Kavanagh from the Land Values Research Group.
“Cities that may have affordable land on the fringes suffer greatly from a lack of services that every respectable community deserves. Few of the leading cities in the Demographia survey rate well in the World’s Most Livable Cities indices for a reason” claimed Mr Kavanagh.
Of concern is the fact that ‘land banking’ is never mentioned in any property think tank related report. The heavily criticised ‘land supply’ issue is a diversionary tactic from the large tracts of vacant land that speculators have accumulated. Speculative vacancies act to enforce scarcity and push up land prices.
“The ‘land rationing’ that affordability experts should be most concerned with is that undertaken by property speculators” stated Prosper Australia spokesperson Karl Fitzgerald.
The recent I Want to Live Here report found that over a year’s supply of auctionable land is being held off the market by speculators in the rapidly gentrifying City of Maribyrnong. The report also found that speculative vacancies are not recorded in the REIV’s ‘official’ vacancy rate.
The Office of Borough’s ‘No Vacancy?’ report found that 492 million square feet of residentially zoned land is vacant in New York city.
“Such speculative vacancies push up prices for the average person, leading people to engage in criminal acts just to put food on the table” said Mr Kavanagh.
A far better result would be to see our existing land supply used to its optimum.
Small business would benefit greatly if taxes were switched off our incomes and placed onto fixed assets such as land. Then the large vacancies prevalent throughout the world would be used productively rather than speculated upon, as higher holding charges would deem it uneconomic to hoard land for speculative purposes.
Land prices would drop, encouraging business to operate in the most efficient places possible – close to the central CBD and infrastructure hubs. Taxes could also be reduced, encouraging production over speculation.
With the threat of global warming and the massive infrastructure deficits most cities already face, unending sprawl should be seriously countered by a reformed Land Tax.