Winning the residential race
November 23, 2015 10:29 AM   Subscribe

When it comes to housing, Australia and Berlin are worlds apart. In Australia, as in much of the English-speaking world, housing is treated as primarily a vehicle for investment and wealth creation, a state of affairs which began with the privately-financed speculative building of colonial times, and is firmly entrenched in the culture; 70% of Australians own their own homes, and the “Australian Dream” is still widely held to be home ownership, though these days the home may well be a trendy inner-city apartment rather than the traditional bungalow on a quarter-acre block. In Berlin, however, the vast majority of residents are renters, and they have considerable political clout, as they have had for decades.

The result of this is vastly different legal regimes: in Australia, tenants' rights are regarded as a case of beggars-can't-be-choosers; landlords are free to raise rents and evict tenants more or less at will, and there's nothing seen to be wrong with being in the business speculatively and charging what the market will bear, or indeed leaving investment properties vacant if it's more profitable to do so. There are tax breaks for property investment such as “negative gearing”, and bipartisan support for retaining them. In Berlin, however, rents are controlled, tenancies secured and landlords are left to make only steady returns rather than impressive profits. And new laws proposed will further restrict rents to 30% of income and provide 400,000 affordable homes.

The Australian approach may soon be tested; Sydney and Melbourne have, in recent years, soared up the ranks of most expensive cities to live in, and first-time buyers are finding it harder to afford homes. However, there seems little will in the two major parties to alter their laissez-faire housing policies.
posted by acb (22 comments total) 12 users marked this as a favorite
 
housing is treated as primarily a vehicle for investment and wealth creation

Where "wealth creation" = "rent seeking" in both its quotidian and economic senses. The fact that we've made such rent seeking a primary basis of our economies is fucking terrifying.
posted by howfar at 11:07 AM on November 23, 2015 [12 favorites]


The outlook for the sector is positive, driven by a continuing increase in Victoria’s population and the need to provide housing and related infrastructure.

-The Victorian government view of the construction industry as of last month. ie, we aren't thinking of anything beyond constant population growth and constant demand for housing.
posted by deadwax at 11:58 AM on November 23, 2015


Canada has the same thing going on. We're so conditioned to associate laymen's investment with home ownership that we don't even think twice about it (i.e. maybe there could be another way to protect one's retirement savings and possibly even grow them). There's pressure on home prices to remain stable (or rise) even in an inflated market, so that no one loses their savings. Meanwhile, wages have not been keeping up with house prices, so young people who are not in on the housing market find it increasingly difficult to enter, or even afford the rent necessary to live in the city. A city will stop being an attractive place to live if its young, vibrant core gets pushed out!
posted by mantecol at 12:00 PM on November 23, 2015 [2 favorites]


The other side of Berlin's rent control is that it's almost impossible to get an apartment there. There's a projected shortage in the near future as well. I'm still unconvinced it is ethical to restrict rent when there are people lined up to move to the city who can't find a place to live. I won't argue it's a good idea to promote government subsidy of ownership - because that's equally bad - just that it seems like government subsidy of renting has the same sorts of issues (it's just that the government is picking a different group of people to prop up). All of this is especially true if you don't have a schufa report, in which case you might as well not even bother trying to move to Berlin - why would a landlord rent to you when they can't charge you more to compensate for the credit risk and there are hundreds of citizens with perfect credit reports lined up to take the place instead?
posted by saeculorum at 12:59 PM on November 23, 2015 [1 favorite]


The other side of Berlin's rent control is that it's almost impossible to get an apartment there.

To what extent is rent control a causative factor of the shortage of accommodation? It's not as if London, for example, isn't desperately short of housing.
posted by howfar at 1:08 PM on November 23, 2015 [2 favorites]


This post and the underlying article tick so many lazy housing reporting boxes.

1) Use the word "affordable" without defining it precisely. Maybe the author meant any below-market-rate housing (no matter the magnitude of the subsidy or the price of the housing)? Maybe they were referring to any housing below a certain price? Who knows?

2) Assume that a ban on fancy new buildings is the same as a ban on fancy homes. Zero thought given to where the people who would have bought in that stopped Templehof development went instead.

3) Describe a complex policy (negative gearing in this case) which encourages some activities relative to others as "laissez-faire". You can critique a policy without misrepresenting it.

4) Demolish a straw man, like "the market is not always a panacea for affordability". It's true, and it speaks to the need for non-market housing, but the author uses it to shut down any suggestion that increased supply might also be desirable.
posted by ripley_ at 1:11 PM on November 23, 2015 [3 favorites]


The other side of Berlin's rent control is that it's almost impossible to get an apartment there.

Really? Has it become a Stockholm-style closed shop already?
posted by acb at 1:19 PM on November 23, 2015


It's not as if London, for example, isn't desperately short of housing.

In a deregulated free market, you're free to pay 3/4 of your salary for a mattress under a staircase or a shed in someone else's living room, if that's the price that the market will bear in that white-hot boomtown.

In a regulated market, the prices can't rise to meet demand (or housing stock cannot be subdivided into shoebox-sized parcels which are affordable to the desperate stiffs competing for space), so if supply runs out, those who have it are lucky, and everybody else is SOL.

Of course, in both cases, the underlying problem is a lack of supply. Though increasing supply in itself is not enough when the flats that appear are snapped up by speculators and let out at extortionate rents, or (if they're expected to rise), “bubble-wrapped” and left empty to be flipped a year later (or to serve as a pad for when the owner's trophy mistress flies in from St. Tropez for her bimonthly shopping expedition or something).

And while in one sense, freeing price signals to rise to what the market can bear seems fair, it is only fair if market value (and wealth/income) is the only allowable factor that can determine whether somebody belongs in a desirable/prestigious city. Which, in the post-Reagan/Thatcher era, is accepted as an obvious truth unless followed to its consequences (artificial cities, as dead as preserved flowers, consisting only of the super-wealthy and the help lodging in their premises; the death of any sort of grass-roots culture that gives cities their frisson; and everybody from streetsweepers to doctors living hours out of the city and enduring punishing commutes to their jobs; and “labour-market flexibility” and the ready supply of people even more desperate squeezing them harder, the broken being discarded; but, hey, the invisible hand has demonstrated that these people are disposable, so who are we to argue?)
posted by acb at 1:36 PM on November 23, 2015 [2 favorites]


artificial cities, as dead as preserved flowers, [...] the death of any sort of grass-roots culture that gives cities their frisson; [...] the broken being discarded

You'd think that this sort of city would not be the place people would want to live in.

You'd think that this sort of city would not have high rents.
posted by saeculorum at 1:46 PM on November 23, 2015


there's nothing seen to be wrong with being in the business speculatively and charging what the market will bear, or indeed leaving investment properties vacant if it's more profitable to do so.
In my circles this is definitely not true [Sydney home owner]. I can attest that there are these sorts of people around, (I'm am so happy to be out of the rental market) but they are treated with disdain and in no way looked up to as smart investors by me and my friends and acquaintances.
posted by unliteral at 3:23 PM on November 23, 2015


You'd think that this sort of city would not be the place people would want to live in.

You'd think that this sort of city would not have high rents.


And yet real people carry on having lives and homes and commitments and cultural needs and emotional attachments and familial responsibilities and everything else that makes blind faith in the soothing invisible hand a naïve mistake. And massively wealthy people still want playgrounds that have nothing to do with the pleasures or practicalities of those of us who live alongside them.
posted by howfar at 3:37 PM on November 23, 2015


The Australian property market makes me so angry. It's very common for middle class people of my parent's generation to own multiple investment properties - my own parents own two plus their primary home. My generation? Not so much. My boyfriend and I have given up on the idea of ever owning, especially now we are parents there is no way we can save the 20% deposit (approximately $120,000) to buy a hovel or 2 bed apartment in the area where we live. My parents don't understand why we are complaining when we'll inherit a house after they die - only 30 years to go!
posted by Wantok at 6:41 PM on November 23, 2015 [1 favorite]


I've visited and lived for short times in cities with strong rent control and non-market housing options, but never for long enough to know what it would really be like to live in that context. There are things I like about the housing market here, which is similar in many ways to the Australian example in the FPP, but there are a lot of things I don't like, also. How to balance the two is not so easy, I think.
posted by Dip Flash at 7:36 PM on November 23, 2015


How to balance the two is not so easy, I think.

tax rents. . .
posted by Heywood Mogroot III at 8:01 PM on November 23, 2015


. . . and take the money and build more subsidized public housing.
posted by Heywood Mogroot III at 8:02 PM on November 23, 2015


problem is "public housing" has been Pruitt-Igoed by conservatives.
posted by Heywood Mogroot III at 8:03 PM on November 23, 2015


problem is "public housing" has been Pruitt-Igoed by conservatives.

Not just that, any idea of a public good is explicitly out of the question. It's the same reason America (and Australia) can't have decent public transport; because tolerating public transport, or public housing (or, in some places, public healthcare or public education) would be allowing the idea of the common good to exist, and thus be a treasonous capitulation to Socialism, and/or the mortal sin of moral hazard. It's Reaganism meets Calvinism.

In much of the US and Australia, public transport is regarded much in the way that unemployment benefits are: a safety net for the have-nots, which it would be immoral to provide without the attendant humiliations that remind them that, through participating in the economy without owning the requisite assets, they are in a state of debt. It's the same with not owning your own home: they can't quite restrict voting to landowners (though in the UK, the Tories' moves to change the way the electoral roll is organised may end up kicking people on insecure tenancies off the rolls), but they can reinforce the message that non-landowners are second-class citizens.
posted by acb at 2:36 AM on November 24, 2015 [4 favorites]


It's the same reason America (and Australia) can't have decent public transport

This, like the rest of your post, is a gross oversimplification. Transit capital costs are *extremely* high in many/most American and Australian jurisdictions - even if they spent the same amount as Europe and Japan, they'd still end up with much less.
posted by ripley_ at 7:40 AM on November 24, 2015


It also completely disregards a number of other important factors: massive differences in land-use regulation that discourage the residential density needed for public transport, multiple American regulations (FRA, Buy America) that prevent Amtrak and others from using lighter European or Japanese trains, and probably a bunch of other things that I'm missing.

Don't get me wrong, market dogmatists are awful, but citing them as the reason why America has bad public transport misses so much.
posted by ripley_ at 7:52 AM on November 24, 2015 [1 favorite]


multiple American regulations (FRA, Buy America) that prevent Amtrak and others from using lighter European or Japanese trains

Though are those regulations there for a reasonable purpose (the laws of Newtonian mechanics are the same in America as they are in Europe and Asia, after all), or are they there to protect incumbent interests/nobble competition in a plausibly deniable way?

For one, a country that refuses to regulate handguns or provide healthcare requiring that all trains be far heavier than they are abroad out of concern for public safety does sound somewhat implausible. Surely a free competitive market between extra-safe, heavy railways and quicker, lighter ones would enable the public to settle on the level of risk that is acceptable to it.
posted by acb at 10:05 AM on November 24, 2015


Not just that, any idea of a public good is explicitly out of the question. It's the same reason America (and Australia) can't have decent public transport; because tolerating public transport, or public housing (or, in some places, public healthcare or public education) would be allowing the idea of the common good to exist, and thus be a treasonous capitulation to Socialism, and/or the mortal sin of moral hazard. It's Reaganism meets Calvinism.

I would actually argue the opposite. America has a deep streak of socialism-- when it comes to cars. Free parking is de rigueur. Tolls are generally hated, and congestion tolling in New York etc faces huge resistance. Gas taxes are low. Private developers are often required to devote 50%+ of their square footage to the "public good" of parking.

As a result, mass transit simply isn't going to be very functional, even when it's heavily subsidized. Public transit works when it connects walkable places to other walkable places, so one vehicle can effectively serve dozens of people. When everything is spread out by parking lots and wide roads and "green spaces" which protect people from the unpleasantness of the parking lots and wide roads, and a bus has to travel on circuitous routes, picking up one or two people at a time, there is no way for it to be cost-effective to run, or convenient to use.
posted by alexei at 1:55 PM on November 24, 2015 [1 favorite]


Yes and no; there are subsidies, but the subsidies are there to encourage individualism and prevent economies of scale driving people to public transport, with its sweaty shoulder-to-shoulder solidarity and dangerous whiff of Bolshevism, instead, preserving the myth of the American as rugged individualist, pulling themself up by their bootstraps. It's an under-the-table kickback to feel good about oneself, and to take pride in something that doesn't actually exist, at least in the form it is mythologised to exist in.

See also: the extensive US military-industrial complex, with its unaccountable black budgets and pork-barrelled manufacturing facilities distributed by congressional district; it's sometimes referred to as “Socialism with American characteristics”.

Australia has the same mindset because it's the Australian way to import Americanisms without thinking, as a somewhat cargo-cultish embrace of modernity. Which is why the Labor Party's name is spelled so unusually for Commonwealth English, the decimalised currency is named the dollar, and Australian power points have flat pins, the same size as US pins (though angled at 45 degrees because the voltage is different). (We never got assault rifles as a basic human right or NTSC television, though, so that's possibly to be thankful for.)
posted by acb at 9:36 AM on November 25, 2015


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