Download 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
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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
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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?
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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
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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?
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System-wide approach and governance
Outcomes orientation
Evidence informed, strategy driven
Cross departmental, cross order
Maximise subsidiarity
5. Policy Conclusions for Moderate
Modernisation?
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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!