Renegade Economists Podcast 105
As broadcast on www.3cr.org.au on 090909
Listen to the Gentrification special on cultural profiling.
A special focusing on gentrification and the undermining of community – useful for those interested in our $3000 first prize I Want to Live Here Film competition. Enter and you have a 1 in 13 chance of winning at the moment!
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The Olympic Resistance Movement
Vancouver – world’s most liveable city – another tag adopted by the real estate industry. See also The World’s Happiest People. Also our local efforts in 2006 at the Stolenwealth Games
Mother fears Olympics win will be her loss by Diane Rusignolaand Kate Goshorn
While many Chicagoans are pushing for the city to win the 2016 Olympic bid, some residents of Washington Park – where the games would be held – fear for the future.
Residents of the South Side neighborhood worry they may get the short end of the Olympic stick if gentrification forces them out of their homes to make room for stadiums and athlete training facilities.
“Of course they’re going to have to move people,” said Denise Williams, a 49-year-old Washington Park resident who said she grew up in a South Side housing project.
“They’re rebuilding” this area, Williams said. “But when you see how much money they want? They’re only accepting so many people” for low-income housing units.
FHOG – First Home Owners Grant
Check ABS Stats Doc 560909a-3
In original terms, the number of first home buyer commitments as a percentage of total owner occupied housing finance commitments fell, decreasing from 27.1% in June 2009 to 25.7% in July 2009.
– still 7.9% higher than at the peak of the boom, Nov 2007
Since 1991, FHO (First Home Owners) as a % of total housing finance has been 20.1% of all housing, still 5.6% higher now.
Reached a high of 28.5% in May 09
Average size of loan since ’91 = $140,100, in month of July 09 = $269.1 !!!
Why has the average loan increased by $129K?
Have houses gone up in price?
NO – it’s the land!
The shocking thing is that those who have already owned a home are taking out loans of LESS value! – July non-FHO was $266,200 v FHO of $269
Average for non FHO is 152K over the last 18 years
July’s loan average was $266.2 – again why the $114,200 increase?
Leverage is the key: those that have sold out at the top of the market have used this capital to re-invest, inferring they require less money from the bank.
Over the last 12 months, since Aug 08, the wealth transfer that has occurred between first and existing home owners = 6.5%. That’s a handy intergenerational wealth transfer for some.
The average income earner on $57000 should pay $11,100 in income tax
Then look at indirect taxes, say spends 200 p/w = $3120 in indirect shhhh taxes (a very conservative estimate)
In 30 years, a lifetime of work = $426600 in taxes (again, as a very rough estimate)
In 18 years we have seen a $129000 increase in land values x 2 = $258000 in capital gains (again – back of the envelope) over an approximate 36 years of home ownership = an underhanded rebate for property owners. See Ricardo’s Law on youtube for more on this long ignored issue.
If a hardworking person trades up in location and housing, the capital gains will be greater, seeing a lifetime in taxes underwritten by massive land based capital gains.
This is the source of the wealth divide, the gap between the have’s and have not’s.
Consider if you have an investment property or 8, the cap gains v the tax writeoffs v tax havens. Why work? Who pays for the roads, schools etc that land owners benefit from?
We covered this FHOG ok but the Age summed it up swiftly here First home buyers priced out even at the lower end
Greg Barber tweets:
Growth Areas Authority admits infrastructure charge (at $6500/lot) will cover only 15% of the cost of infrastructure at urban fringe.
My former Professor John Freebairn, head of the Melbourne Institute of Applied Economic and Social Research at Melbourne Uni, Melbourne Institute Working Paper Series, Working Paper No. 11/05, A Comparison of Alternative Tax Bases:
“On the criteria of economic efficiency, simplicity and greater revenue, there is a compelling case to both broaden the land tax base by removing the current exemptions and the zero rate threshold, and to move to a flat land tax rate. In particular, because land tax when levied on the unimproved value is born ultimately by the wealth owner and has no effect on the market land value (which is determined by demand against a fixed supply), it has the virtue of a non-distorting and efficient tax. Unfortunately, the redistributive effects and associated political opposition to these changes combine to make such a radical reform unlikely.”
If only we got to talk about this injustice!
Israel’s 350 new houses on stolen Palestinian land
A moral equivalence – New Jewish organ theft gang busted