A Dream Home We Can All Afford

Expensive housing is built on expensive land. Land prices are the biggest and fastest inflating factor in housing costs.

Some homes around Sydney, for example, are expensive not just because of natural sun and the harbour: there is also a human factor speculating in land. On average, vacant land in most cities is about 20% of the total city area. Under-utilised land wastes even more area.

Charge landholders for the area they use and practically overnight, they will put their previously withheld (for financial investment purposes) sites onto the market.

The method used to "tax" land is a higher rates charge, based upon land ownership. Title to the property remains with the landowner - not the government. Nobody would want the government to have that much power. The rates charge really though, is not a tax. It is merely one method available for government to collect the community generated ground rent. In modern market economies like Australia, this ground rent manifests as land price.

There is ample evidence that "taxing" land not buildings, works to make housing more affordable (and life in general) more pleasant. New York in the 1920's cured its housing shortage (temporarily whilst this initiative was in place), by "taxing" land not buildings. Pittsburgh "taxes" land six times higher than its buildings. It is no co-incidence that Pittsburgh has the lowest housing cost, and the lowest crime rate, of any major city U.S. city. Pittsburgh has been voted America's most livable city two years running 1985-86 (Rand - McNally). Not bad for America's "Steel-city".

Australia has the world's highest home ownership level for exactly the same reason. Geoffrey Blainey, in his book "A History of Camberwell", explains it this way:

"A few hundred people (in Camberwell, a suburb of Melbourne) owned large areas of cow paddock and market garden and vacant land and refused to sell them for housing partly because they believed the speculative value of the land would rise. Such people blocked Camberwell's growth and contributed little to its municipal revenue. At Camberwell junction and other shopping centres, owners of old wooden shops were paying smaller rates than the enterprising landlords who built expensive shops and attracted business to the centre. In residential streets, landlords who allowed houses to go unpainted and unrepaired paid smaller rates, while the landlord who improved his property and therefore the neighbourhood's appearance and land values was penalised for his enterprise with higher taxes. The reformers argued that a new method of municipal taxation would accelerate the pace of Camberwell's growth and improve the quality of the suburb. Calling for a referendum, they carried the poll after a fierce campaign and Camberwell and Caulfield became the first Victorian municipality to tax the land and not the buildings. From 1922, the new method of taxation undoubtedly forced many large landowners to release vacant land for house building..."

If present trends are an indication however, Australia's high owner-occupied housing level is about to fall dramatically. Negative gearing puts two, three or sometimes more homes, in the hands of those who can afford it.

Governments, under pressure from land developers, are moving to abolish rates on land (site value rating). Why? Because rating land does not permit property speculators to "bank" their land holdings in expectation of further land price rises.

People in their ignorance are accepting the change.

Your dream home is fast getting out of reach because of these factors.

Land price is your enemy.

Copyright (c) 1995 Geonomic Services <geonomics@glasswings.com.au>