Housing Affordability: Win the Argument | Eliza Owen | TEDxYouth@Sydney

The median house value in Sydney is now nearly $1 million dollars, and Sydney is one of the most unaffordable cities in the world. Unfortunately for non-home owners, no one seems to be doing anything about it. Part of the reason younger generations in particular get left out of these conversations, is that they don't understand the numbers behind the current housing boom. In her talk, Eliza goes back to basics. She explains measurement terms, real dollar values and how to recognize when people are undermining the cost of owning in Sydney. Eliza warns not to leave economics to the economists. Studies of economics are accessible from high school, university and the internet, and will give young people the tools to articulate what they need from policy makers.
Eliza is an economist, writer and comedian who believes economics should be accessible to everyone, not just economists. She currently works as a market analyst for onthehouse.com.au, and has a regular economics segment on FBI's 'Backchat'.
This talk was given at a TEDx event using the TED conference format but independently organized by a local community. Learn more at ted.com/tedx

[@camman6912]

My heart goes out to young people today that are trying to buy their first home In 1981 I bought my first home for 81 thousand Now that same home is selling for 550 thousand

[@Trucnguyen1226]

how much is your house worth now just curious?

[@lenkathompson863]

Thanks for that great summary of housing affordability in Sydney. It gave an easy to understand and accessible presentation of an issue that touches an increasing number of people. Would love for you to come and talk to some residents in Melbourne, if you're ever in town! Well done.

[@schumanhuman]

An important distinction. Houses prices do not go up, houses are capital which depreciates from the moment it has been constructed. So what is going up is the value of the location aka land value. The solution to all this is not hard to understand and nor is it particularly new having it's roots in the classical economists. Adam Smith noted long ago that land is a natural monopoly, 'Ground-rents are a still more proper subject of taxation than the rent of houses. A tax upon ground-rents would not raise the rents of houses. It would fall altogether upon the owner of the ground-rent, who acts always as a monopolist, and exacts the greatest rent which can be got for the use of his ground.' The modern version of this, as formulated by Mill and Henry George is land value tax, this would simply stop land speculation in it's tracks and housing would simply become places to live and work, not speculative assets. Such as tax would not create any disincentives to work or produce, thus if it replaced taxes upon labour and capital it would also lower the damage these taxes cause to the economy as a whole, it's a win win for the economy. My understanding is Australia is not without history of land taxes, especially in Canberra, but these have been weakened over the years. Of course all the subsidies that governments push into the housing bubble must be stopped as well, ie negative gearing. So if the advantages are so great why does it not happen more often, and when it does why is it often reversed or watered down via loopholes and subsidy? The problem has always been political, there is always the pressure for lobby groups and individuals to capitalize on the growing land values, privatizing them can always enrich a few, even more now as a significant number own houses and see their prices rising as a positive, and after all their kiddies will inherit from their 'prudence' in the end eh? But this always ends in excessive credit being pushed into them and boom bust cycles, which ultimately benefit no one, and a consolidation to a smaller and smaller demographic of those born into privilege. How else can it end? Land prices can only rise with either increased productivity or increased debt, so houses become worth whatever a bank is willing to lend to buyers! No bank reform alone has ever stopped this cycle, Remove the speculative incentives at root or the problem will persist.

[@kalidesu]

+schumanhuman WE have a LOT of land in Australia we are only 23-24 million people. The government can release crown land to those low income people who can develop it. Because government public housing is a joke. Your right the American Fed and the similar Australian reserve bank are fueling these problems for house affordability for both the working poor and fix income people in both our countries.

[@schumanhuman]

kalidesu Sure, contra popular belief we have a lot of spare land here in the UK too, only 11% is urbanized. But developers do not want land released, and if more is rezoned they will just landbank as much as possible, indeed many speculators have already bought up protected green belt land in the expectation it will later be rezoned. So eventually a new boundary of enclosure is reached and Ricardo's law of rents pushing down wages will again come into full force, this law is as irrefutable as any law of nature, yet most economists ignore it as if it were only relevant to agricultural land. Fundamentally though land cannot be imported to prime locations because it is precisely it's location that generates economic rent, hence lands status as a natural monopoly. The myth that simple increases in supply via rezoning or relaxation of planning laws will lower prices long term has been refuted time and time again by all empirical evidence. Rognlie, Stiglitz and others showed Piketty that within his own data if anything the dominance of land as a claim upon wealth has grown exponentially since 1945, and infact accounts for almost all of the unequal gains. Not returns to capital itself. What is more in many countries this fuels predictable boom bust patterns of average 18 year cycles as identified by Fred Harrison (who predicted 2008 in 1997), though Oz is a bit of an unknown it should be interesting to see what the China crash does to the massive land bubble.

[@kalidesu]

schumanhuman I would live out in the sticks if I could get a good fast internet. I think the old idea the young move into the city and the old to the country with the capital is changing with the tyranny of distance with technology changing this. I don't mine if there is an suburban sprawl if there there are city like business hubs in between, this still works. The land bubble crash can be avoided by not funding it, but at the moment it's government sponsored casino.

[@schumanhuman]

kalidesu Yes advances in transportation (google car) and communication would spread land values more evenly. This itself would not solve the problem. The most dangerous myth is believing land bubbles can be fixed by bank reform alone, new credit ALWAYS finds it's way into speculation of govt protected privileges on land, and any system of banking involves the creation of credit. While I support public banking models upto a point even the strictest full reserve models have investment sectors which could allow 'split the zero', this means any new credit created for mortgages can be pumped back into buying land, even if further restrictions it requires arbitrage. Of course restrictions on mortgages etc can help contain the problem, but money would always find it's way back into land speculation as it always has over the last three centuries where we had full reserve,gold standard and free banking models, with strong regulation and weak regulation. Periodic banking and land bubbles have been observed under all these systems. However countries that either tax land, have leasehold systems, or strong social housing sectors all have far less viscous land cycles. Plus bank reform would not allow the removal of damaging taxes upon the economy whereas it is acknowledged land value tax are the only tax which actually encourages more productivity, so any banking reform must include a further shift away from taxes upon labour and capital and onto land or it is doomed to failure.

[@gamertone6953]

+schumanhuman Are you in the States?

[@kalidesu]

The problem is housing is use as an investment medium, but we as human beings need to live somewhere. Or will be on the street constantly on ice to avoid getting assaulted. I safe place to put your head at night should be a human right. On solution is the Australian government can release crown land and let people on small or limited income build their own houses, this was a similar thing what happen after world war 2 when return service people got when coming home from the war. People aren't lazy if given the opportunity to earn it. It's bit like if water was scarce, and water was used as a trading medium. People will start dieing if they can't afford it. The government needs to shift investment incentives away from housing, if they don't want a large underclass that will turn the country into a government controlled welfare state. The Australian government should stop fueling the corporate welfare for the housing industry fueling this current housing bubble, with the current Australian reserve bank keeping interest rates low isn't helping it's as it cannibalises retires living on their super and savings and forcing those people on to benefits. So it helps no one except real estate agents and overseas high risk mostly Chinese investors. Australian people should come first, not the cabal of international banksters which own our leaders.

[@balbhatt]

In Mumbai today average matchbox aprtment costing 40 Year of house hold income

[@mmmarvel]

At the end she said, we can use these tools to make real change. Not sure how - it's one of the basic facts of economics. There is a certain supply and a demand. The greater the demand, the greater price it commands. You can up the supply, but in many cases all that does is attract/increase the demand even more, so you end up with more people but don't alleviate the problem. In the USA, both San Francisco and New York City have these problems as due many other cities in the USA. In Great Britain, England has this problem. One solution is to save up and then move to someplace that is affordable. Another solution that many people have come to is one of 6 (or more) people living in a one bedroom apartment. Another solution is to move to an area where the living is more affordable and commute. We all know the problems with this solution but for many people it feels like/is a better solution. All this talk did was to point out that inflation and demand has made home afford-ability in Sydney very high.

[@MrApplewine]

Housing is so expensive because zoning laws prohibit building smaller units for people and also because people want to live in mansions. A single person can comfortably live in 200-300 square feet, use a roll up blanket bed and sleep on the floor, no need for an oven or giant fridge/freezer. Many cultures live like this. A person should be able to rent a nice apartment for around $300. (also, low prices can attract the wrong kind of people, which is a societal problem, so they always inflate the price to enforce segregation I suspect).

[@scottybrew123]

Me watching this in 2021 where Sydney’s median is almost $1.5million now 😭

[@baits9301]

councils are cashing in on higher property values . council rate rip offs .

[@jononolan946]

She's got her a good job. She's always quoted on ABC News. I don't think she'd want to debate Martin North.

[@bernadettekennedy2981]

Realtors are to blame for homelessness. Speculating should be against the law and realtors should have to have degrees with ethics laws. They should not be able to sell homes to investors instead of homebuyers and should not be able to set rents or home values.

[@johnburns4017]

The solution is Land Value Tax. Look it up.

[@Imdazedandconfuzed]

Bright analysis. Appreciate it.

[@pissybissy8510]

we had to watch this for school 😵

[@pissybissy8510]

i know right

[@areeba5908]

smae besty😩

[@pissybissy8510]

i hate economics 👎

[@236Mars]

Great video. A real reality check!

[@hepthegreat4005]

Housing crash... BRING IT! Get a roommate, it is your duty to do so. Because if more people do that, the demand goes down, prices will have to go down.

[@bign1667]

Little did she and we knew is that in 2021 it's worse...so much worse now that my everyone is priced out of the market. It's now insanely ridiculous!!!!

[@po.7amza]

It's about the economic system #capitalism, People pay taxes, people pay interests and that one of results!

[@benjaminfielding9423]

Land banking!

[@keepcalmandblametheblackgu9164]

this nation is ruined

[@Minty1337]

WOMBAT, doubt you expected that

[@jononolan946]

She seemed nervous which is understandable.

[@coopsnz1]

taxes by councils

[@michelleobrien6996]

what about the fact that many young Australians like herself will inherit houses valued at over $1 million from their parents and grandparents? Big oversight in the equation. If their parents didn't buy real estate then they can complain to their parents about housing affordability, otherwise stop moaning as you are still very privileged. It is immigrants who are disadvantaged and that is why we have government owned housing and that is why immigrants are offered such housing, sometimes before those who have lived in Australia their whole life.

[@michelleobrien6996]

I know there is insufficient government housing but we also have rental housing and we have outer suburbs and country towns - all more affordable options

[@coopsnz1]

shrink government , will make homes affordable

[@shaxshaxly]

I am mother of four beautifull children's work full time my partner work hard too we chose not to buy house in Sydney because mortgage stress renting 4 beautiful bedroom in Sydney for $430 per week no stress or headache in our marriage live happy and raising our children in happy environment saving all our money and use wisely our money. live is too short to worried everyday about life and I Hate bank making billion of dollars for profit for every year when people struggle paying off there mortgage i thing when it comes to buying house its choice people make and has long time struggle.

[@CHNL2ActionNews]

all I heard her say was, "poor me. life is too hard and I'm too weak."

[@Ben_Dover753]

benny stanley You're one special kind of spastic.

[@zeckj83]

had to stop watching after 2 minutes. Voice was too distracting.

[@keepcalmandblametheblackgu9164]

i would still pound her

[@cv5330]

she seems bitter/angry.

[@keepcalmandblametheblackgu9164]

yeah a lot of aussies are mate housing prices in this country are way to high

[@Dubsys]

she sounds so fake angry and i can't actually keep listening

[@pengyuwu2331]

economist knows knows nothing LOL

[@thomashoward8023]

Your voice is terrible to listen to, Work on it