Cross Post: Zeev Vinokurov How government increases housing prices

Source: catallaxyfiles.com --- Thursday, March 30, 2017
Australia’s housing prices are astronomical. Indeed, compared to local salaries, Australian cities are among the world’s most unaffordable places to live. But you may not know why. The startling truth is that housing unaffordability is a costly, unfortunate consequence of zoning laws. These prevent developers from building enough properties to meet housing needs and boost the economy. It’s a problem which the NSW government largely skirts over in its recently floated housing policy proposals. Substantial zoning reforms are unlikely to occur because not enough people realise that zoning increases prices. Zoning laws like Melbourne’s or Sydney’s restrict developments based on their height, and on whether they are residential, commercial or industrial in nature. That makes it harder to build multi-storey apartments or commercial developments outside the inner city and commercial districts, which increases the cost of land. Indeed, economist Alan Moran estimates that many properties could sell for hundreds of thousands of dollars less if developers were generally allowed to build upwards and outwards throughout our cities. Melbourne’s South Eastern and inner Western suburbs, for example, restrict construction of buildings over two storeys high except on main roads. That means no apartment buildings or commercial complexes in some of the most hotly demanded and wealthiest parts of Melbourne. This may help explain why Melbourne’s curre ...

from Australia http://ift.tt/2nkSCPt