tails and elephants
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Transcript tails and elephants
Duncan Maclennan
University of Ottawa
[email protected]
TAILS AND ELEPHANTS?
The Economy and the Housing
Market: Modern Policy Challenges
Argument
– Global, Booms: National and Local Processes
– Consequences: Multiple, Not just Affordability
– Scope for Modernising or Remaking Housing
Policies
– Policy Shifts
– Policy Conclusions
1. Economic Systems
Globalisation, growth and inequality
Rising real incomes
Lower real and nominal interest rates
Reduced real user cost, tax reinforced
Deregulated Housing Finance Circuits
Borrowing Rules
Mortgage equity release
Impacts Local Planning/Infrastructure systems
First best and flexible impacts catallaxia systems
1. Global Challenges and Local
Outcomes
Cross – national differences
Housing markets, spatial concentration
Localised land and labour
Localised booms and bubbles
Policy Issues are Housing and Cities
2. Consequences; Immediate
Effects
House prices
Homeowner burden, user cost down
Critical deposit capacity
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Starter incomes
Parental and family wealth
Education debt
Single Person demographic
Reducing equilibrium ownership rate?
Renter burden? Rents Flat?
– Buy to let
– Gentrification?
Social, rental roles and queues
2. Consequences; Medium Term
Medium Term
Supply increases
– Faster suburban, land lower cost
– Land prices and wage rates up
– Developer speculation?
Macro effects
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Equity withdrawal
Price expectations reinforce
Monetary policy complicated
Riskier lending and borrowing?
Migration, immigration
2. Consequences; Longer Term
Longer Term
A lost legion?
Disrupted integration, soc mobility ladders
Sprawl encouraged, infra costs rise
Interest rates and inflation
Growth rates and housing?
Spending gains on existing bricks as progress?
Incentives for saving and investment by sector?
Tenure outcomes, prices, burdens, rental sectors
and shortages: which problem manifestation
3. Modernising Policy:
Affordability - A Starting Point??
Policy uses.
Affordability, the rhetoric
Which groups, what ethical judgements
Affordability, the trigger to support
Analytical roles?
For Whom, for How Long, For What?
Affordability versus Acceptability
Affordability, the explanation of choices?
A muddy, ethical concept. Costs and shifting
income distributions are the issues
3. Modernising Policy: Basis for
Change
Retrenchment after the 1980s
Income target support
Housing as residual social security/policy
Reduce social housing investment, Pub Ex
Focus on homelessness
Favour ownership ( rather than efficient market),
tax breaks
Role for non-profits
Devolution, Subsidiarity, Dumping?
Demoralised, delinked policies
3. Modernising Housing Policy
Re-engagement Starts in 1990s
Because
Costs rising, income inequalities
Homelessness
Low income renters, n’hood decline
Growth and displacement in city cores
Sprawl and quality impacts on environment
Recognition of economic role beyond income, to
stability and growth
4. Policy Shifts Now?
Financial regulation, BIS etc
Monetary policy, asset prices
Macro view on housing
Taxing non-labour incomes
Prices and the environment
Housing supply
Mortgages and demand
– Different sectors, levels
4. Policy Shifts: Governance of
Supply Change
Recreate policy capacity – Central / Local
Improve information and evidence base
Inventory of public land
Framework / evidence to link to meta goals
Government and Governance structures
Can governments rethink a better governance
system for housing?
4. Policy Change: Planning
Governance, Culture & Aims of Planning System
Beyond ‘better building regulations’
Strategic Planning
– From metro-region to n’hood templates
– Coherent economic and social analysis
– House price aims, using pricing tools
Development and Masterplans
– Speed and delivery
– Delivery vehicles and affordability
Policy Change: Supply cost/tax
Taxing unearned gains?
Alternatives
– Strategic inclusionary zoning with capture agent
– Community land in new 3rd sector vehicles
– Infrastructure charging, settlement structures
Related issues
– Smart growth
– Construction labour shortages
4. Policy Change: Ownership
Demand side
Taxation of housing: renting, owning
Recycling parental gains to children
Should sellers pay stamp duty?
Capital gains tax
Do mortgage reforms help?
Shared equity products
Equity growth shares for tenants?
But is demand the issue?
Policy Change: Rental
Rental Markets
Buy-to-let versus REITS
Taxation, again
Security for longer term?
Renting social
Case to keep
Create local housing agencies
Mix tenures and equity ladders from gains?
Low income tax credits, all sectors
5. Policy Conclusions for Moderate
Modernisation?
System-wide approach and governance
Outcomes orientation
Evidence informed, strategy driven
Cross departmental, cross order
Maximise subsidiarity
5. Policy Conclusions for Moderate
Modernisation?
Reshape NFP Developers
Use contestability in provision and planning
Consider tax neutrality and “economic rents”
Dynamic wealth focus
Supply side focus of support
Good Luck!