“Land shall not be sold”
We had fair warning but were taught to disregard that prohibition.
The English labourer of the 15th century lived the life of Reilly because he had more than half his income to spend after food, clothing and shelter. He had no debt because he paid land rent: land had no price. No, he didn’t drive a car, have TV nor a computer, but neither did the King of England. Today, like the rest of us, the English labourer is in debt.
Australia tops the class in pumping up land prices: it’s a case of every man to the wheel. Housing (read ‘land prices) has become unaffordable for everyone needing a house except the very wealthy. Many young people feel they need to overstate their incomes to be able get a loan from the bank for a house.
So, here we are today, with everybody saying the Reserve Bank of Australia needs to increase the cash rate from 0.1%, even though it will put many Australians into deep mortgage stress – and worse. Let’s see what the RBA does next Tuesday?
Whatever the RBA does, I doubt the property market will collapse next year. This looks more like October 1987 than October 1989 to me, when the share market collapsed two years before the property market. Of course, a property market collapse is the sine qua non for an economic depression, and many people don’t realise that world real estate markets had collapsed before the 1929 share market decided to follow suit.
The land price virus, along with all the taxes we levy on labour and capital (instead of on land prices), has just about done civilisation in. That’s why we’ve need bigger and bigger budget deficits to cope with the background inflation that’s not measured by the CPI.
So, my money remains on real estate markets topping out in 2026 before we have the mother of all financial depressions because of impossible land prices – once again. Obviously, this is not mainstream analysis, but it’s likely correct because it’s Georgist.