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zacmcdougall's review
5.0
A great overview of how and why Australia is in the position it is today, and some practical solutions to begin to fix housing. Highly recommend
drillvoice's review
5.0
I read this QE expecting to disagree with lots of it. Overall, however, I'd say it's one of the clearest and best articulations of Australia's terrible housing system, with only one main flaw.
Kohler's general thesis is that Australia's problem began around the turn of the millenium, when a range of measures that pushed up demand for housing (tax subsidies, first home buyer grants, immigration, low interest rates). These demand-side measures interacted with a system that was already supply constrained, because of historic planning restrictions and the fact that available land close to cities was, by this point, basically exhausted.
This is a good take. I don't think it makes sense to ignore demand - you need a way to make sense of the huge growth post 2000 - but also you need a way to explain why supply was inelastic. Kohler's story accounts for all these elements.
Kohler is weaker on solutions. He mentions numerous sensible things - tax reform, planning reform - but then dismisses them as unrealistic. I guess the man is primarily a journalist about economics, not a political economist! Instead he fixates upon trains. Look, I love trains, but I think perhaps the zoning reforms he writes-off are actually more realistic than he expects - indeed, many of them are coming into effect in NSW! It seems strange to talk about this huge social and political problem and then not be open to the possibility that the political economy of the issue may change. Kohler doesn't seem to register that there is a growing constituency that is ready to reward action on housing issues!
And this relates to the main flaw: Kohler accepts the idea that existing owners benefit from and want rising house prices. This is false. Existing owners who will make purchases in the future are hedged against increases, but it is basically zero sum. As my sister told me when she recently upsized: yes we sold our old place for much more than we paid for it, but you wouldn't believe how much we paid for our new place. In addition, many more boomers - even those who may not upsize - are seeing the challenges of their own children, and the financial pressures this puts upon themselves. As such, the potential constituency for reform is not only renters, but also mid-life owner-occupiers, and even later-life owner-occupiers with renting children. This is perhaps quite a big idea to explore, and Kohler only had so many pages to use, but it would have been a more novel and refreshing take, rather than just synthesizing lots of existing ideas (admittedly, a great synthesis!).
Overall a quite efficiently written overview of the problems and potential solutions.
Kohler's general thesis is that Australia's problem began around the turn of the millenium, when a range of measures that pushed up demand for housing (tax subsidies, first home buyer grants, immigration, low interest rates). These demand-side measures interacted with a system that was already supply constrained, because of historic planning restrictions and the fact that available land close to cities was, by this point, basically exhausted.
This is a good take. I don't think it makes sense to ignore demand - you need a way to make sense of the huge growth post 2000 - but also you need a way to explain why supply was inelastic. Kohler's story accounts for all these elements.
Kohler is weaker on solutions. He mentions numerous sensible things - tax reform, planning reform - but then dismisses them as unrealistic. I guess the man is primarily a journalist about economics, not a political economist! Instead he fixates upon trains. Look, I love trains, but I think perhaps the zoning reforms he writes-off are actually more realistic than he expects - indeed, many of them are coming into effect in NSW! It seems strange to talk about this huge social and political problem and then not be open to the possibility that the political economy of the issue may change. Kohler doesn't seem to register that there is a growing constituency that is ready to reward action on housing issues!
And this relates to the main flaw: Kohler accepts the idea that existing owners benefit from and want rising house prices. This is false. Existing owners who will make purchases in the future are hedged against increases, but it is basically zero sum. As my sister told me when she recently upsized: yes we sold our old place for much more than we paid for it, but you wouldn't believe how much we paid for our new place. In addition, many more boomers - even those who may not upsize - are seeing the challenges of their own children, and the financial pressures this puts upon themselves. As such, the potential constituency for reform is not only renters, but also mid-life owner-occupiers, and even later-life owner-occupiers with renting children. This is perhaps quite a big idea to explore, and Kohler only had so many pages to use, but it would have been a more novel and refreshing take, rather than just synthesizing lots of existing ideas (admittedly, a great synthesis!).
Overall a quite efficiently written overview of the problems and potential solutions.
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