Sunday, June 9, 2013

Commentary on London property market

The parasitic city

If the city didn't update infrastructure to accommodate a building boom, congestion costs would rise to choke off demand. But one could free building rules dramatically (lowering the shadow tax rate) and raise actual property taxes to help fund new infrastructure, and still have everyone come out ahead. Or almost everyone, I should say. Property owners would not. And that's the reason there is a problem in the first place. London property owners, as a class, are effectively an incredibly successful rent-seeking operation greedily sucking up the economic surplus generated by the city's economy. (H/T to bobalicious on the forums.)

Posted by quiet guy @ 11:15 AM (2493 views)
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7 thoughts on “Commentary on London property market

  • stillthinking says:

    When I was in London I paid 80% of my income in rent and tax. I do not think though that the majority of London are highly paid professionals. There are those who were in London pre 1997, which is not so long ago really. There are those in council flats. There are those subsidised throught some form of housing benefits. Of course as well there are people living in one bedroooms and house sharing.

    I think you can look at the decline of white population in London as a result of the modern difficulty to move in, as there was always movement in and movement out vis a vis the rest of the UK. Now there is only the movement out. I can’t even imagine somebody with a family moving to London, so to some extent the capital is running on empty.

    Also I never personally thought that everybody working in London was involved with financial services… There is a big media services sector, a huge tourist sector, and many many company head offices. In London you can probably get 32-34 for the average 25K UK job. It is not enough and I always thought most working people were really struggling and in debt, huge amounts, typically credit card not pre-arranged.

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  • mark wadsworth says:

    Amen.

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  • britishblue says:

    Both My wife and I work. My wife is of Eastern European origin and has been here 25 years. However, it is becoming apparant the people in her group that work hard on normal or small business wages are having to live in small cramped accommdodation, whereas those that have benefits are having a better quality of life. In the inner regions of London you have to be middile management or above to compete with the same standard of living from someone that is getting all their housing paid for.
    The cost of productivity argument is one that is very damaging in the longer term. It not only effects companies wishing to place workers here, but the cost to our youth that can pay upwards of £500 a month, plus bills for a shabby room in London. The basic cost of someone living is the cost for housing, food, utilities and transport. if these remain way above international levels in London, then there has to be negative impact on companies ability to compete internationally as their workers will have to have at least these basics covered to live.

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  • mark wadsworth says:

    BB, in which LVT is intellectually coherent.

    The purist approach says everybody pays the same for the value of land they occupy. So social rents in those small areas you mention would rise, higher earners would move in to the overall benefit of the economy. And the proverbial poor widows and early retirees who consider themselves “land owners” would be under the same economic pressure as younger people and workers who want to live there and are willing and able to pay for it. And the landlords and bankers would not be scooping up all the rent, to the overall detriment of everybody.

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  • What you need to be able to afford to live comfortably is a taxpayer-funded job paying around £624,000 per year and housing benefit of £5,000 per week. Just ask Mark Carney, the migrant worker from Canada who’ll be busily printing the cash at the Bank of England to fund himself.

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  • 1 Move out people on social housing.
    2 Build more houses.

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  • Stuartking
    Why does it need to be taxpayer funded? Carney won’t be the only beneficiary of his post and the others won’t primarily be in the public sector 😉
    N

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