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Inefficient real estate sales

I have never understood why events such as this happen. 267 apartments were sold in Glen Waverley in 90 minutes for $70m. It doesn’t seem to me to maximize profits to the developer – charging higher prices and stretching out the period of sale (or using a simple auction procedure) would make more sense. It […]

Auction clearance rates

For years I have struggled to understand the idea that clearance rates are a useful indicator of the demand dynamics of the home auction market – this is an example of this type of story. A house will be sold when the minimum acceptable price to the seller (vendor price) is exceeded by the maximum […]

Taxing foreign buyers of Australian housing

This measure – discussed in today’s AFR – is (apart from its cost-recovery role*) is effectively an export tax on housing. As such it will diminish the gains from international trade in Australian property markets. It will however (in accord with the standard theory of export taxes) reduce the price of property to Australian consumers. […]

Chinese home buyers

It is incorrect to simply say (as Clive Hamilton does) that Chinese purchases of Australian homes disadvantage Australians because local consumers have to pay more for their homes. The error lies in considering only the consumer surplus losses to local consumers but not recognising the gains in seller surplus to local sellers and the latter […]

House prices in Oz

This article in The Economist argues that house prices around the world are over-valued and that Oz wins the prize for the greatest overvaluation – on their model by 56.1%. Hardly surprising since, on their estimates, house prices in Oz have increased by 197% from 1997-2010. I have split loyalties on this one – I […]

Housing stock not part of wealth?

Willem Buiter has offered the provocative view that the stock of housing should (generally) not be included as part of net wealth. As The Economist remarks:

A shift in the value of housing does not affect household wealth in the aggregate, he says, because on average everyone is a tenant in his own home. A […]

Andrew Leigh on house prices & the value of a quality public education

Andrew Leigh is an amazingly active economist and does work of real social value. The current Economic Record has a piece by Andrew and his colleague Ian Davidoff where he values public school education in the ACT by looking at the effects of better than average test scores on house prices. A preprint of the […]