PPCC: Pisitófilos Creditófagos. Invierno 2019

[Hynkel]

Estoy de acuerdo. No se hagan ilusiones de bajadas de un 50% en un par de años. Si eso pasa, las calles arden.

Aunque ahora se aceleren las noticias, yo no preveo un que oficialice la crisis (que todo el mundo sabe) hasta otoño-invierno. Eso es final de año.

Vamos a procastinar, a perder el tiempo (como siempre) a dejar pasar las oportunidades históricas (es nuestra historia, estamos condenados a repetirla). Sólo, si quebrara alún banco medio grande (hola bankia, hola caixabank), pero no como hace 10 años... sino en plan corralito, y detrás se fueran a la mierda unas cuantas empresas que dependen de ellos, sólo con un pánico general, podríamos hablar de bajadas rápidas y considerables.

Como esto no está ni se le espera ... vamos a sufrir una lenta agonía. Bajaran los que necesiten vender imperiosamente. Comprarán los que encuentren estos chollos y tengan cash. Durante este viaje se perderan 1 o 2 millones de empleos (ya sea directa o indirectamente). la sanidad empeorará, la educación también, y la seguridad. Pero la culpa será del cambio climático, del coche eléctrico o de Trump, nunca del pisito.

Fíjense como se está preparando la tormenta perfecta. Con el tema del cambio climático y estas cosas vamos a perder mucho en 2 de nuestas principales industrias: Turismo e Industria de automoción.

Señores, "nos vamos a cagar". Lenta y dura agonía.

O no, no estemos tan seguros.

Hubo un caso llamativo hace años en Jerez de la Frontera. Año 2011, la crisis ya está desatada, los apesebrados van al hay-untamiento a decir que "qué hay de lo mío", la alcaldesa de entonces les dijo que no había un puñetero duro, y el personal se quedó en shock y sin saber qué hacer. Y eso que era un caso de libro de clientelismo. Décadas con el infausto Pacheco de alcalde, y luego el PP y el PSOE locales entrando también y añadiendo sus propios apesebrados. Allí prácticamente todo Dios que no fuesen los jubilados y los funcionarios estaba en el ajo. Cerrarles el grifo les suponía poco más que aguantar con subsidios y chapuzas, y las calles no ardieron.

Doctrina del shock. Si al personal se le suelta la bofetada de que se acabó lo que se daba, el miedo de "y qué hacemos ahora" puede provocar una parálisis.


Como dije en otro mensaje, coincido en que probablemente la percepción de la crisis no estalle hasta octubre. Aunque para eso la situación tendrá que alcanzar el verano sin hacer crac antes. Entonces el verano lo disimulará todo y el personal podrá acogerse al pretexto de que como es verano todo está parado.

Por supuesto que a los socialistas -y a los P's- les va a caer la del pulpo como supuestos culpables de la muerte del ladrillo. Una cosa que será interesante comprobar es qué dirá la derecha cuando lleguen las siguientes elecciones. Si no huele el inicio de otro ciclo de crédito barato y de empleo basura para maquillar las estadísticas, hará lo imposible por seguir en la oposición. La derecha española no puede perder la etiqueta de "arregladora de la economía", si lo hace se puede quedar condenada a la oposición para mucho mucho tiempo.

[Hynkel]

se olvidan del recrudecimiento de la situacion del alquiler   

pueden incluso vender creditos para que puedas permitirte financias un alquiler 

¿Qué recrudecimiento, si ya ha sucedido? El alquiler se empezó a descontrolar en 2014 con la reforma legal del año anterior, y sobre todo en 2016 cuando venció la primera generación de contratos de tres años bajo esa ley.

Y desde hace más o menos un año también se ha quemado la carta de vender el piso "porque he visto que el alquiler ya no me renta tanto". Curiosamente justo tras el inicio de la represión fiscal a AirBnb. Ahora ya se sabe que no se vende una escoba, y como hemos comentado hoy mismo, misteriosamente y de la noche a la mañana el alquiler ha pasado de denostado a "opción interesante".

El rentista no quiere alquiler, eso es un mito. El verdadero pelotazo era el pase en la compraventa. El alquiler no es más que el premio de consolación cuando no se puede vender. Como siempre digo, ésa fue una de las reformas clave de la LAU en 2013, dar máximas facilidades al propietario para vender incluso con el bicho dentro. Vender era el verdadero y el único objetivo. El alquiler da un trabajo de gestión que la venta no requiere.


Los rentistas no pueden hacer nada. Ya lo intentaron a partir de 2009, y sólo una intervención externa paró la caída. Hasta entonces tragaron con lo que pensaban increíble, pero que se cumplió: ejecuciones hipotecarias y ventas a pérdidas.

[Derby]

https://finance.yahoo.com/news/davos-2020-salesforce-founder-capitalism-is-dead-181643945.html

Billionaire Salesforce founder: 'Capitalism as we know it is dead'

The billionaire founder of Silicon Valley company Salesforce (CRM) declared on Tuesday modern capitalism is “dead”, saying business leaders now have a “responsibility” to think beyond just shareholders.

“Capitalism as we have known it is dead,” Marc Benioff, chief executive of Salesforce, said at Davos. “This obsession that we have with maximising profits for shareholders alone has led to incredible inequality and a planetary emergency.”

(...)“Stakeholder capitalism is finally hitting a tipping point,” Benioff said.

[optimusmaximus]

https://www.bde.es/f/webbde/SES/Secciones/Publicaciones/PublicacionesSeriadas/DocumentosOcasionales/20/Fich/do2002.pdf

Un estudio del Banco de España donde (¡qué sorpresa!) las conclusiones son las mismas que lo que se sabe ya desde hace más de 2.000 años sobre el establecimiento arbitrario de precios por parte de burócratas.

[Juan]

Yo sigo pensando que, aquel que quiera hacer negocio con la vivienda sin ser un completo chaflanero, debería apostar por las viviendas de 1 y 2 dormitorios en las ciudades grandes (Madrid, BCN). Hay falta de vivienda de ese tipo en calidades decentes, y cada vez vamos más a eso. Vamos, si yo tuviera 35 años, prefiero una vivienda de 1 habitación (2, si teletrabajase) y vivir solo que compartir piso con 3 desconocidos. Lo de las experiencias bonitas se lo dejo a los erasmusers.

Serviría un tiempo, pero tampoco sería una solución duradera. En realidad esta idea ya tiene debilidades desde hace tiempo. El precio del metro cuadrado se dispara cuando se baja de cierto tamaño total de la vivienda, precisamente por la escasez de este tipo de viviendas. Hace tiempo que no es extraño preferir rascarse un poco más el bolsillo y a cambio tener una mejora brutal en la relación calidad precio y pagar sensiblemente menos por m2.

A eso justo me refiero, a que hay una falta increíble de ese tipo de viviendas.

Pero eso ya era así hace años. No es algo nuevo, está de vuelta de todo. Lo de coger viviendas más grandes hasta yo lo he hecho precisamente por esto, sin necesidad de subir mucho la renta del alquiler pasas de zulos en semisótanos a áticos y hasta dúplex.

Por eso mismo, "himbertir" a estas alturas en pisos de 1 o 2 habitaciones ya llega tarde.

Ah, no, yo no me refería a himbersores que compran zulos para alquilarlos, me refería a que en las nuevas promociones de viviendas, se hacen pocas casas pequeñas (decentes, no agujeros). Creo que tiene más salida a corto y medio plazo un edificio con 6 pisos por planta de 55m2 y 1 habitación que de 2 por planta de 150m. Porque hay más demanda (a corto y a medio plazo) de un piso de 1habitación que no sea un agujero que de un piso de 3 habitaciones con comedor y salón diferenciados, creo.
Y creo que una promotora, bien construya pensando en alquilar, bien sea en venta, con eso estaría preparándose para la demanda a medio-largo plazo. Además que, imagino, es más factible venderle a un chaval un piso de 180k y 55m2 (es carísimo, sí, pero ponte en la piel de la MN, que no cree que vaya a bajar y es algo que, más o menos, se podrá permitir a la que tenga un buen sueldo y algo de ahorros) que uno de 350k a una pareja (vete a saber si no te divorcias mañana).

[Derby]

https://www.reuters.com/article/us-ecb-policy/ecbs-lagarde-launches-policy-overhaul-that-will-leave-no-stone-unturned-idUSKBN1ZL32Y

ECB's Lagarde launches policy overhaul that will leave no stone unturned

The European Central Bank launched a broad review of its policy on Thursday that is likely to see new President Christine Lagarde redefine the ECB’s main goal and how to achieve it.

“We will not leave any stone unturned and how we measure inflation is clearly something we need to look at,” Lagarde told her second news conference as ECB president.

[visillófilas pepitófagas]

https://www.bde.es/f/webbde/SES/Secciones/Publicaciones/PublicacionesSeriadas/DocumentosOcasionales/20/Fich/do2002.pdf

Un estudio del Banco de España donde (¡qué sorpresa!) las conclusiones son las mismas que lo que se sabe ya desde hace más de 2.000 años sobre el establecimiento arbitrario de precios por parte de burócratas.

Gracias, optimusmaximus.

El documento no dice nada nuevo para los foreros, y los autores son ofertademandistas. Para ellos el problema es de oferta-demanda. La renta y poder adquisitivo del personal son muy secundarios.

Resumiendo:

Hay 3 tipos de políticas de intervención pública en el mercado del alquiler de vivienda:

1) Los controles sobre los precios del alquiler
- Pros: se dirigen de forma inmediata y directa a los problemas de accesibilidad y de sobrecarga del alquiler en el gasto de ciertos colectivos.
- Contras: la oferta suele reducir las viviendas disponibles en el mercado, reducir los gastos de mantenimiento de los inmuebles o modificar la composición de la vivienda ofertada para eludir la regulación. Además, se puede ocasionar una segmentación de la población según sus condiciones socioeconómicas, reducir la movilidad de los trabajadores que no desean perder un arrendamiento inferior al precio del mercado o incrementar el precio del alquiler en segmentos no regulados del mercado.

2) La provisión pública de vivienda en alquiler a precios asequibles
- Pros: se centra en la causa del incremento del precio del alquiler de vivienda: la insuficiencia de inmuebles disponibles ante aumentos de la demanda. [ofertademandismo]
- Contras: retos presupuestarios (es una medida costosa para las arcas públicas). Además, requiere un diseño eficiente en su implementación para evitar desincentivar la movilidad geográfica de los beneficiarios, limitar los riesgos de segmentación social (por la posible concentración de bolsas de exclusión social) y minimizar el «efecto expulsión» de la oferta de alquiler por parte de agentes privados.

3) Otras medidas diseñadas con el objetivo de incidir de manera indirecta tanto en la oferta como en los precios del alquiler de vivienda.

i) la modificación de la normativa jurídica que regula los contratos de alquiler de vivienda: dota de una mayor seguridad jurídica a los propietarios, lo que suele equilibrarse con la protección al inquilino en relación con la duración mínima del contrato, la actualización de las rentas o las condiciones que regulan la rescisión del contrato por parte de los propietarios.

ii) la introducción de instrumentos de política fiscal con capacidad para incidir sobre la oferta y la demanda de alquiler de vivienda: Por el lado de la oferta, la introducción de beneficios fiscales incrementa la rentabilidad neta de la inversión en alquiler. Por el lado de la demanda, pretende reducir la carga que el alquiler supone. Sin embargo, los subsidios se suelen incorporar al precio y se acaba en una transferencia de rentas (y recursos públicos) hacia los propietarios. Por ello, buena parte de las economías avanzadas favorecen los beneficios fiscales a la oferta. También han surgido propuestas de penalización fiscal de las viviendas desocupadas para estimular la oferta de alquiler residencial, pero aún no hay evidencia sobre su efectividad

iii) las regulaciones que condicionan la oferta de vivienda residencial en el ámbito local: la revisión de regulaciones que impiden, dificultan o demoran la construcción de vivienda nueva o restringen el uso residencial de los inmuebles podría reducir las tensiones en los precios inmobiliarios. De manera complementaria, algunas de las ciudades con mayor presencia turística a escala global han endurecido (o lo están contemplando) la regulación del alquiler de viviendas de uso turístico, con el objetivo de limitar la reducción de la oferta de alquiler residencial en zonas específicas de la ciudad, pero aún no hay evidencia sobre su efectividad.


No se han quedado calvos detrás de la oreja, pero apuntalan el mensaje ofertademandista que tanto place al BdE de un tiempo esta parte.

[Marv]

No comparto que no se haya aprendido nada. Ahora se sabe que la vivienda puede bajar, por eso lo del alquiler. No hay expectativas de pase.

Pero también se sigue "sabiendo" que los pisos bajan porque hay crisis, y no al revés. Lo que no se aprende ni a tiros es que se trata de un problema productivo, económico, y nacional, no personal -de los bichos y los tiesos-. Que la carestía es causa (una de ellas) de que vayamos mal, eso no se sabe.

Dicho esto, me parece que estamos atrapados en un ni palante ni patrás. Si hubo alguna ventana de oportunidad para cambiar, se nos ha cerrado. Es un efecto que se puede observar en las empresas, valga la comparación: sólo sabes hacer una cosa y todo está montado para eso; empezar a hacer otra cosa no es una opción, no sabes, no puedes, no tienes los medios, y sí todas las resistencias, así que sigues haciendo lo mismo esperando que en algún momento el mundo se adapte a ti.

Cambiar el modelo productivo, eso que nos sermonean, da pánico. La hoja en blanco paraliza, y no hay incentivos suficientes -aún- para cortar por lo sano. Los habrá. Pero coincido con ustedes, no lo esperemos pronto.

[Derby]

https://www.thenational.ae/world/mena/us-in-talks-with-lebanon-s-new-government-to-help-stave-off-financial-crisis-1.968452

US in talks with Lebanon’s new government to help stave off financial crisis

Country needs aid to help pay for food, fuel and medicines

[SteelFingers]

Jan 16th 2020 edition

The horrible housing blunder
Home ownership is the West’s biggest economic-policy mistake
It is an obsession that undermines growth, fairness and public faith in capitalism

Economies can suffer both sudden crashes and chronic diseases. Housing markets in the rich world have caused both types of problem. A trillion dollars of dud mortgages blew up the financial system in 2007-08. But just as pernicious is the creeping dysfunction that housing has created over decades: vibrant cities without space to grow; ageing homeowners sitting in half-empty homes who are keen to protect their view; and a generation of young people who cannot easily afford to rent or buy and think capitalism has let them down. As our special report this week explains, much of the blame lies with warped housing policies that date back to the second world war and which are intertwined with an infatuation with home ownership. They have caused one of the rich world’s most serious and longest-running economic failures. A fresh architecture is urgently needed.

At the root of that failure is a lack of building, especially near the thriving cities in which jobs are plentiful. From Sydney to Sydenham, fiddly regulations protect an elite of existing homeowners and prevent developers from building the skyscrapers and flats that the modern economy demands. The resulting high rents and house prices make it hard for workers to move to where the most productive jobs are, and have slowed growth. Overall housing costs in America absorb 11% of gdp, up from 8% in the 1970s. If just three big cities—New York, San Francisco and San Jose—relaxed planning rules, America’s gdp could be 4% higher. That is an enormous prize.

As well as being merely inefficient, housing markets are deeply unfair. Over a period of decades, falling interest rates have compounded inadequate supply and led to a surge in prices. In America the frenzy is concentrated in thriving cities; in other rich countries average national prices have soared, especially in English-speaking countries where punting on property is a national sport. The financial crisis did not kill off the trend. In Britain inflation-adjusted house prices are roughly equal to their pre-crisis peak, while real wages are no higher. In Australia, despite recent falls, prices remain 20% higher than in 2008. In Canada they are up by half.

The soaring cost of housing has created gaping inequalities and inflamed both generational and geographical divides. In 1990 a generation of baby-boomers, with a median age of 35, owned a third of America’s real estate by value. In 2019 a similarly sized cohort of millennials, aged 31, owned just 4%. Young people’s view that housing is out of reach—unless you have rich parents—helps explain their drift towards “millennial socialism”. And homeowners of all ages who are trapped in declining places resent the windfall housing gains enjoyed in and around successful cities. In Britain areas with stagnant housing markets were more likely to vote for Brexit in 2016, even after accounting for differences in income and demography.



You might think fear and envy about housing is part of the human condition. In fact, the property pathology has its roots in a shift in public policy in the 1950s towards promoting home ownership. Since then governments have used subsidies, tax breaks and sales of public housing to encourage owner-occupation over renting. Politicians on the right have seen home ownership as a way to win votes by encouraging responsible citizenship. Those on the left see housing as a conduit for redistribution and for nudging poorer households to build wealth.

These arguments are overstated. It is hard to show whether property ownership makes better citizens. If you ignore leverage, it is usually better to own shares than to own homes. And the cult of owner-occupation has huge costs. Those who own homes often become nimbys who resist development in an effort to protect their investments. Data-crunching by The Economist suggests that the number of new houses constructed per person in the rich world has fallen by half since the 1960s. Because supply is constrained and the system is skewed towards ownership, most people feel they risk being left behind if they rent. As a result politicians focus on subsidising marginal buyers, as Britain has done in recent years. That channels cash to the middle classes and further boosts prices. And it fuels the build-up of mortgage debt that makes crises more likely.

It does not have to be this way. Not everywhere is afflicted with every part of the housing curse. Tokyo has no property shortage; between 2013 and 2017 it put up 728,000 dwellings—more than England did—without destroying quality of life. The number of rough sleepers has dropped by 80% in the past 20 years. Switzerland gives local governments fiscal incentives to allow housing development—one reason why there is almost twice as much home-building per person as in America. New Zealand recoups some of homeowners’ windfall gains through land and property taxes based on valuations that are frequently updated.

Most important, in a few places the rate of home ownership is low and no one bats an eyelid. It is just 50% in Germany, which has a rental sector that encourages long-term tenancies and provides clear and enforceable rights for renters. With ample supply and few tax breaks or subsidies for owner-occupiers, home ownership is far less alluring and the political clout of nimbys is muted. Despite strong recent growth in some cities, Germany’s real house prices are, on average, no higher than they were in 1980.

A home run
Is it possible to escape the home-ownership fetish? Few governments today can ignore the anger over housing shortages and intergenerational unfairness. Some have responded with bad ideas like rent controls or even more mortgage subsidies. Yet there has been some progress. America has capped its tax break for mortgage-interest payments. Britain has banned murky upfront fees from rental contracts and curbed risky mortgage lending. A fledgling yimby—“yes in my backyard”—movement has sprung up in many successful cities to promote construction. Those, like this newspaper, who want popular support for free markets to endure should hope that such movements succeed. Far from shoring up capitalism, housing policies have made the system unsafe, inefficient and unfair. Time to tear down this rotten edifice and build a new housing market that works. ■

This article appeared in the Leaders section of the print edition under the headline "Home ownership is the West’s biggest economic-policy mistake"

https://youtu.be/kkVEt5tC2xU

[SteelFingers]

Housing is at the root of many of the rich world’s problems
Since the second world war, governments across the rich world have made three big mistakes, says Callum Williams

Special report
Jan 16th 2020 edition
Jan 16th 2020
The financial crisis of 2008-10 illustrated the immense dangers of a mismanaged housing market. In America during the early to mid-2000s irresponsible, sometimes illegal, mortgage lending led many households to accumulate more debt than they could sustain. Between 2000 and 2007 America’s household debt rose from 104% of household income to 144%. House prices rose by 50% in real terms. The ensuing wave of defaults led to a global recession and nearly brought down the financial system.

From the 1960s to the 2000s a quarter of recessions in the rich world were associated with steep declines in house prices. Recessions associated with credit crunches and house-price busts were deeper and lasted longer than other recessions did. Yet the damage caused by poorly managed housing markets goes much deeper than financial crises and recessions, as harmful as they are. In rich countries, and especially in the English-speaking world, housing is too expensive, damaging the economy and poisoning politics. And it is becoming ever more so: from their post-crisis low, global real house prices have since risen by 15%, taking them well past their pre-crisis peak.

Traditionally politicians like it when house prices rise. People feel richer and therefore borrow and spend more, giving the economy a nice boost, they think. When everyone is feeling good about their financial situation, incumbent politicians have a higher chance of re-election.

But there is another side. Costly housing is unambiguously bad for the rich world’s growing population of renters, forcing them to trim spending on other goods and services. And an economic policy which relies on homebuyers taking on large debts is not sustainable. In the short term, finds a study by the imf, rising household debt boosts economic growth and employment. But households then need to rein in spending to repay their loans, so in three to five years, those effects are reversed: growth becomes slower than it would have been otherwise, and the odds of a financial crisis increase.

Malfunctioning housing markets also hit the supply side of the economy. The rich world’s most productive cities do not build enough new houses, constraining their growth and making them more expensive than they would otherwise be. People who would like to move to London, San Francisco or Sydney cannot afford to do so. Since productivity and wages are much higher in cities than outside, that reduces overall gdp.

So it is bad news that, in recent decades, the rich world has got worse at building new homes. A recent paper by Kyle Herkenhoff, Lee Ohanian and Edward Prescott argues that in America this process has “slowed interstate migration, reduced factor reallocation, and depressed output and productivity relative to historical trends”. Constraints on urban growth also make it harder to reduce carbon-dioxide emissions, since big cities are the most efficient built forms. In America there are more building restrictions in places which have lower emissions per household.

Housing is also a big reason why many people across the rich world feel that the economy does not work for them. Whereas baby-boomers tend to own big, expensive houses, youngsters must increasingly rent somewhere cramped with their friends, fomenting millennials’ resentment of their elders. Thomas Piketty, an economist, has claimed that in recent decades the return to capital has exceeded what is paid to labour in the form of wages, raising inequality. But others have critiqued Mr Piketty’s findings, pointing out that what truly explains the rise in the capital share is growing returns on housing.

Other research, meanwhile, has found that housing is behind some of the biggest political shocks of recent years. Housing markets and populism are closely linked. Britons living in areas where house prices are stagnant were more likely to vote for Brexit in 2016, and French people for the far-right National Front in the presidential elections of 2017, according to research from Ben Ansell of Oxford University and David Adler of the European University Institute. Political disputes sparked the protests in Hong Kong, but the outrageous cost of accommodation in the city-state has added economic fuel to the political flames.



This special report will argue that since the second world war, governments across the rich world have made three big mistakes. They have made it too difficult to build the accommodation that their populations require; they have created unwise economic incentives for households to funnel more money into the housing market; and they have failed to design a regulatory infrastructure to constrain housing bubbles.

Happily, they are at last starting to recognise the damage caused by these policies. In Britain the government now openly says that the housing market is “broken”. Scott Morrison, Australia’s prime minister, has pledged to make housing more affordable. Canada’s recent election was fought partly on who would do more to rein in the country’s spiralling housing costs. Carrie Lam, Hong Kong’s chief executive, has put housing front and centre in her response to the protesters.

They need to learn from places where the housing market broadly works—and those places do exist. As this report shows, flexible planning systems, appropriate taxation and financial regulation can turn housing into a force for social and economic stability. Singapore’s public-housing system helps improve social inclusion; mortgage finance in Germany helped the country avoid the worst of the 2008-10 crisis; Switzerland’s planning system goes a long way to explaining why populism has so far not taken off there. Governments across the world need to act decisively, and without delay. Nothing less than the world’s economic and political stability is at stake. ■


This article appeared in the Special report section of the print edition under the headline "Housing is at the root of many of the rich world’s problems"

[SteelFingers]

How housing became the world’s biggest asset class
It is only a recent phenomenon

Special report
Jan 16th 2020 edition
Jan 16th 2020
In 1762 benjamin franklin set sail from England to Philadelphia after several years away. On his arrival he was shocked by what he saw. “The Expence of Living is greatly advanc’d in my Absence,” he wrote to a friend. Housing, he thought, had become particularly expensive. “Rent of old Houses, and Value of Lands…are trebled in the last Six Years,” he complained.


If Franklin were alive today, he would be furious. Over the past 70 years housing has undergone a remarkable transformation. Until the mid-20th century house prices across the rich world were fairly stable (see chart). From then on, however, they boomed both relative to the price of other goods and services and relative to incomes. Rents went up, too. The Joint Centre for Housing Studies of Harvard University finds that the median American rent payment rose 61% in real terms between 1960 and 2016 while the median renter’s income grew by 5%. In the 18th century farmland was the world’s single-biggest asset class. In the 19th century the factories used to power the Industrial Revolution took the number-one spot. Now it is housing (see chart, below).


In capitalism’s early days house prices did see short-term booms and busts: 17th-century Amsterdam experienced a few housing bubbles, as did 19th-century America. Three main factors, however, explained long-term price stability. First, mortgage markets were poorly developed. Second, rapid improvements in transport meant that people could live farther away from their place of work, increasing the amount of economically useful land. Third, there was not much land regulation, meaning that housebuilders could build when they wanted and in the way that suited them. “For most of us history,” say Edward Glaeser of Harvard University and Joseph Gyourko of the University of Pennsylvania, “local economic booms were matched by local building booms.”

After the second world war, however, housing markets underwent a revolution. Governments across the rich world decided that they had to do more to care for their citizens—both as a thank-you for the sacrifices and to ward off the communist threat.

To this end, they vowed to boost home-ownership. A country of owner-occupiers, the thinking went, would be financially stable. People could draw down on equity in their house when they hit retirement or if they found themselves in difficulty. In the late 1940s and the 1950s manifestos of Western political parties became more likely to identify home ownership as a policy goal, according to research by Sebastian Kohl of the Max Planck Institute for the Study of Societies. Over time, the notion that owneroccupation was superior to renting became common, even apparently self-evident.

Policies to promote owner-occupation proliferated. In America the Veterans Administration made mortgages with no down-payment available to veterans in the mid-1940s. Canada established the Central Mortgage and Housing Corporation for returning war veterans. In 1950 the Japanese government established the Government Housing Loan Corporation to provide low-interest, fixed-rate mortgages. Changes to international financial regulations also encouraged banks to issue mortgages.

In a research paper Òscar Jordà, Alan Taylor and Moritz Schularick describe the second half of the 20th century as “the great mortgaging”. In 1940-2000 mortgage credit as a share of gdp across the rich world more than doubled. More people clambered onto the “housing ladder”. America’s home-ownership rate rose from around 45% to 70%; Britain’s went from 30% to 70%.

In previous centuries, a rise in demand for housing did not translate into structurally higher house prices. What had changed in the second half of the 20th century? One factor was transport speeds, which continued to improve but more slowly: trains and cars got only a bit better. So instead of moving farther and farther out to find accommodation, more people needed to look for somewhere to live closer to work. Land prices rose, and that fed into costlier housing.

The price of preservation
In the 1950s and 1960s governments constructed large amounts of public housing, in part to rebuild their cities after the devastation of the second world war. Yet at the same time many of them tightened land regulation, gradually constraining private builders. In the 1940s and 1950s, for instance, Britain passed legislation to prevent urban sprawl. It provided for “green belts”, areas encircling cities where permission to build would be hard to obtain. Around the same time cities elsewhere, including Sydney and Christchurch, explored similar plans. From the 1960s American builders, too, began to have serious difficulty obtaining approval for building new homes.


According to calculations by The Economist, the rate of housing construction in the rich world is half what it was in the 1960s (see chart). It has become particularly hard to build in high-demand areas. Manhattan saw permission given to 13,000 new housing units in 1960 alone, whereas for the whole of the 1990s only 21,000 new units were approved. A recent paper from Knut Are Aastveit, Bruno Albuquerque and André Anundsen finds that American housing “supply elasticities”—ie, the extent to which construction responds to higher demand—have fallen since the pre-crisis housing boom.

Why did the rich world turn against new construction? The post-war rise in home ownership may have had something to do with it. In 2001 William Fischel of Dartmouth College proposed his “homevoter hypothesis”. The thinking runs that owner-occupiers have an incentive to resist development in their local area, since doing so helps preserve the value of their property. As home ownership rises, therefore, housing construction might be expected to fall.

Research supports that idea. One paper studies a ballot in 1988 in San Diego, finding that precincts with a larger share of homeowners had more votes cast in favour of growth controls. Another finds that parts of New York City with high home-ownership rates were more likely to implement measures which made development more difficult. There is little doubt that the rich world is a less friendly place to build than it once was. But to what extent is land regulation responsible for today’s sky-high prices? ■



This article appeared in the Special report section of the print edition under the headline "How housing became the world’s biggest asset class"

[SteelFingers]

Politicians are finally doing something about housing shortages
But will it reduce housing costs?

Special report
Jan 16th 2020 edition
Jan 16th 2020
To get a sense of why London has such expensive housing, visit Tottenham Hale. You might expect that, next to an Underground station where central London is accessible within 15 minutes, there would be plenty of houses. In fact, there is a car wash. The land on which the car wash sits is officially classified as “green belt” land, which means that building houses on it is almost impossible. Across just five big cities in England there are over 47,000 hectares (about 116,000 acres) of similar land, which is not particularly green, is close to train stations with a good service to their centres, and yet cannot be built on. That is enough space for over 2.5m new homes at average densities.

For decades the green belt was sacred. The British public imagine it, wrongly, as idyllic pasture where horses drink from streams. Politicians dared not talk about it. This is now changing. “It is time to burst the myth that the green belt is green,” Siobhain McDonagh, a Labour mp, argued last year, “and start using the non-green sites for the homes that our children so desperately need.” A cross-party group of mps called upon the government to loosen planning in parts of the green belt. Ministers say that they are looking seriously at the issue.

Britain is not the only place where change is afoot. In 2017 Germany reformed its urban-planning law and lifted barriers to densification. Consultants to the government in Auckland detect a genuine interest in boosting housing supply. In Canada, the Ontario government is streamlining the planning process in order to increase housebuilding. In October California pushed through a broad zoning-reform bill. After decades of nimbyism, there is clearly a backlash, led by millennials unable to afford a house. Many politicians now realise there could be political mileage in building more houses. Some activists have even coined an acronym—yimby, “Yes In My Back Yard”.

Many of those activists argue that overtight land regulation is the root cause of high house prices. To get a sense of the argument, compare Singapore with Hong Kong. Singapore has a fairly elastic planning system. The government owns most of the land. When house-price growth is too strong or the population is rising quickly, the state can release extra land faster than a barman at the Raffles hotel can mix a Singapore sling. In Hong Kong, by contrast, the supply of developable land is controlled by a small clique of oligarchs. What will buy you a cramped bedsit in Hong Kong will buy you a decent-sized pad in Singapore.

It is a similar story in America. The part of the country with the most elastic housing supply, Pine Bluff, a midsized city in Arkansas, has an average house price of $90,000. The cost of a house in one of the most restrictive parts, San Luis Obispo in California, is $725,000, even though building costs across America do not vary much. Common land-use regulations across America include zoning rules which allow only single-family houses and prevent the construction of apartments (94% of residential land in San Jose is zoned in this way, for instance). Since 1950 ordinances which establish exclusive zones, so that homes are not allowed in commercial areas, have become more popular.

Academic research supports the circumstantial evidence. Christian Hilber of the London School of Economics and Wouter Vermuelen of cpb Netherlands Bureau for Economic Policy Analysis found that if south-east England (the wealthiest and most regulated region) had been as open to new construction as the north-east (the least regulated), house prices in the south-east would have been 25% lower in 2008. Edward Glaeser of Harvard University finds similar results for parts of America.

A big refurbishment
Yet what a few years ago was an almost universally accepted view among housing economists—that housing is so costly because there is not enough construction—has come under attack, in particular from Ian Mulheirn of the Tony Blair Institute, a think-tank. Members of this vanguard argue that the obsession with supply restrictions misses a more important cause of high house prices: global financial markets. As interest rates have fallen across the rich world, people can take out bigger mortgages and keep their monthly repayments at a manageable level. Landlords are willing to pay more for a house to rent out, because yields on other assets have fallen.

Some evidence seems to back up the view that economists’ obsession with housing supply is misguided. In the 2000s both Ireland and Spain experienced soaring house prices, even as construction took off. A recent blogpost from researchers at the Bank of England found that most of the rise in British house prices since 2000 was down to cheaper borrowing.

In fact, both causes are important. The loosening in global financial conditions since 2000 has certainly pushed up house prices—as have low unemployment, high immigration and the rise of platforms such as Airbnb, which divert home ownership away from ordinary people. Prices have not risen because building has suddenly became vastly more difficult.

At the same time, however, the long-term rise in house prices is largely down to constrained supply. And if builders struggle to erect new dwellings quickly, a given increase in demand is largely channelled into price rises. Giovanni Favara of the Federal Reserve Board and Jean Imbs of the Paris School of Economics find that, though looser finance has led to higher house prices, that was true “to a lesser extent in areas with elastic housing supply, where the housing stock increases instead”.

Even the most ardent demand-siders agree that building more would reduce housing costs. In policy terms, that matters. Governments have more control over the domestic planning system than they do over global financial conditions. Those who manage their land better are rewarded with more stable housing markets.

Game of zones
Broadly speaking, three types of planning systems exist across the rich world: discretion-based; autocratic; and rules-based. The first type is commonly found in Commonwealth countries. Local residents have plenty of power to stop development plans, and they frequently do. It may be no coincidence that those countries have in recent decades seen the fastest growth in house prices, says Paul Cheshire of the London School of Economics. Parts of America follow similar rules. In San Francisco every permit is appealable and, since very few large-scale projects match existing building and planning codes, delays are common.

Autocratic planning systems do a better job of boosting housing supply. Russia has raised its annual rate of housebuilding from 400,000 a year in the early 2000s to over 1m. Singaporeans who protest against development are routinely ignored, says one with a house located near Tengah forest, some of which will soon be razed to make way for apartment blocks.

The third group—rules-based planning systems—are commonly found in European countries such as France and Germany. If developers tick all the boxes then construction is permitted, even if local residents object. These systems have generally done a better job of delivering housing. Since the 1950s Germany has built twice the number of houses as Britain, despite having only a slightly higher population.

As well as planning rules, the tax system matters. Switzerland demonstrates this well. It has a decent claim to be the world’s most democratic country, reliant as it is on referendums to decide all sorts of issues. (In 2018 it held ten national referendums, on everything from whether or not to penalise farmers who dehorn their livestock to whether or not insurance companies should be allowed to hire private detectives.) Local governments are unusually powerful. Yet nimbyish residents appear to hold little sway. Each year Switzerland builds twice as many houses as America on a per-person basis.

To explain this apparent paradox, a paper by Mr Hilber and Olivier Schöni of Laval University points to the Swiss tax system. In countries such as Britain, though many taxes are levied at the local level, the proceeds are redistributed across the country. Local governments therefore see little economic benefit from allowing home construction, even as they must cope with the disruption. As a result they are unlikely to try too hard to override the nimbys.

By contrast, in Switzerland local taxes stay where they are levied, so local governments have a fiscal incentive to allow development. The process for acquiring planning permission can be slow, explains Melk Nigg, an architect in Zug, a canton close to Zurich which has the joint-highest rate of housing construction in Switzerland. But it is predictable. In the past century Swiss house prices have risen by less than those in any other rich country.

Can such policies be adopted elsewhere, especially in English-speaking countries? It is largely a question of politics. Right-leaning parties in particular recognise that, since homeowners are widely perceived to be more likely to vote for conservatives, unless they can create a new generation of owner-occupiers they will eventually be voted out of office. As the rate of home ownership falls, owner-occupiers lose political power relative to renters, meaning that liberalising planning policy has a lower political cost. And as more people come to see the urgent necessity of cutting carbon-dioxide emissions, support may grow for a new generation of houses with more efficient heating and insulation.

Nonetheless yimbys must tread a fine line. On the one hand, only a long-lasting construction boom has any chance of noticeably improving housing affordability. On the other hand, building on that scale would create much controversy, because of the disruption and because neighbourhoods would change. The continued rise of the yimbys is far from assured. ■


This article appeared in the Special report section of the print edition under the headline "Politicians are finally doing something about housing shortages"

[2 años]

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