Why Does Land Cost the Earth?


Our film Real Estate 4 Ransom is now available online


Real Estate 4 Ransom from Real Estate 4 Ransom on Vimeo.

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5 Comments

  1. Steven Shaw20-03-2012

    On the films FAQ page you ask the seemingly rhetorical question “Is it going to get more valuable?” followed by “Who should get a share of this naturally increasing value, this economic rent?”. So it would seem that you are saying the answer is “yes” (otherwise, you’d be asking who should share in it’s loses). However, this appears to conflict with another statement from the FAQ about “Land Taxes will be charged on approximately a 30% lower land price than at present”. Personally, I think we’re in for substantial falls in land prices. Perhaps this is to do with the distinction you are trying to make between “value” and “price”. In my area (4152), it looks like land could be 3 times or more overvalued (just in the most recent land boom from about 1997). Do you see land prices correcting with or without a LVT? Are you expecting only a mere 30% fall in land prices?

    http://realestate4ransom.com/faq/

  2. Karl Fitzgerald
    Karl Fitzgerald21-03-2012

    HI Steven,

    there is no conflict in the statement but yes it could be clarified. With or without a reasonable Land Value Tax, land in prime locations will become more valuable over time. Our choice is whether we pay a lot to banks via the land price debt we are forced into borrowing, or less to govt when land prices are forced down with a LT (and other taxes removed).

    What I was trying to get across is that land valuations are at present over-priced by some 30%. LVT’s will be charged upon a more realistic land valuation where land is valued at what income can be earned from the site, rather than what the market price is (which of course incorporates the speculative element and the role of easy credit). There is always a battle between traditional land valuers who base their findings on earnings, and the bulls who value virtually on expected future capital gains (vis the Goldman Sachs black list for property appraisers that came to light last year).

    My colleague David Collyer says 15 – 20% this year without LVT. A lot depends on how willing the big 6-7 developers are willing to take a hit and hold Real Estate 4 Ransom, choke supply and force our generations into a lifetime of 40% income to housing prices. Any bets they have crunched those numbers and are weighing up short term Land Tax pain (by choking supply) in lieu of enforcing a change of expectations amongst FHO’s that its normal for two wages x 30% + of incomes be handed over to enter the domain of home ownership.

    A move towards Land Taxes (by getting rid of stamp duty here in Oz) would go a long way to checking this monopoly power.

  3. Paul28-03-2012

    Is this video posted on Youtube.. the buffering on Vimeo makes it unwatchable!

  4. Karl Fitzgerald28-03-2012

    HI Paul,

    no, the youtube buffering is bad too! Perhaps trying to ‘Save As’ by right clicking the Download film from the vimeo page (half way down right hand side). It will take awhile to download, but then you will be able to play it on MPEG streamclip/ VLC etc.

  5. Bryan Kavanagh17-04-2012

    It doesn’t buffer badly for me on Vimeo, but if it does the answer, of course, is to purchase a copy of the video from Prospe Australia. It comes in a very attractive package and is the only true historical documentation in video form of how this great economic depression was generated. It’s a “must have” in my opinion. And that’s not just ‘cos I’m in it! :)

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https://prosper.org.au/2012/03/15/why-does-land-cost-the-earth/