7 ms·

In Sweden we removed the property tax completely which has shaped our housing market a lot. People over consume living area and use their homes as retirements s

by pimmen 8y ago

In Sweden we removed the property tax completely which has shaped our housing market a lot. People over consume living area and use their homes as retirements savings since it’s dift cheap to sit on it, contributing to the housing crisis we’ve had for the past decade.

seanmcdirmid 8y ago
China lacks a property tax, which is a big reason for their huge housing bubble.
- tryonqc 8y ago
  You are correct. China only tax when you sell / buy property. The porperty tax "reform" should be in place by the end of 2019 though. I think house prices in china can't really be compared with other country for lots of reasons, eg: they don't own their homes (70y lease), very low interest on loans (1-2%), real estate is seen as a very good investment in china, etc.:)
  - seanmcdirmid 8y ago
    The 70 year leases are probably going to be renewed very cheaply/easily as happened in Wenzhou when the middle class made a huge fuss over the early (shorter term) leases ending. The central government had to step in and make the local government renew them for basically nothing. Also, China lacks very good investments (the stock market is still a joke), so real estate is seen as the only viable option to beat inflation. So even in hot markets like Beijing and Shanghai, lots of nice apartment buildings will have empty units, which are just being held as an asset and are not even renovated to be rented out. China is not really that unique from other countries, it’s real estate market is quite expected considering the factors that created it.
    - baybal2 8y ago
      Indeed, feel to be 1-to-1 parallel to property bubble in 200x Russia, except scaled to the size of China: Russian law effectively prevents people who can't pay for a personal financial lawyer to invest abroad, and for the short period of time the fun lasted people were investing in even crazier vanities than Chinese do now. I believe that "you can't invest abroad unless you have money for a legal counsel" applies to a lot of countries. Adding to you point on property taxes: Russian provinces with regional property taxes only saw, i think, 1/10th of the bubble in comparison to the rest of the country. At the time when an average private individual could buy 5 flats in 3 years in hopes of bubble growing faster than than interest on his loan, it will be pretty expensive to pay even 0.75% property tax, as it can easily be bigger than guy's annual income.
virmundi 8y ago
Here's a counter-argument. Keeping property taxes means that old people have to pay yearly rent to the government to simply keep their house. In Florida that's about 2k a year for my home. That's fine when we have an income. It's a bit more problematic when that's 10-20% of a yearly retirement income from which one also has to pay for necessities. As to the housing crisis, what laws are preventing multistory buildings? SF blocks a lot of housing over 3 stories since they want to keep the mystique of the city from the Full House days (https://en.wikipedia.org/wiki/Full_House https://en.wikipedia.org/wiki/Full_House). This makes housing extremely expensive since no one can easily put up a 50 story luxury housing apartment complex (which could have 1.5k sq/ft for a mere $675k).
- cletus 8y ago
  It's this kind of nonsense that allowed abominations like Prop 13 in CA to pass. This particular fallacy is a classic false dichotomy. It's not an either-or situation. In CA the incumbents voted themselves a massive tax break ("because retirees") when, if retirees were something you really cared about, you could simply give them a lower rate of tax or no tax at all for their principal place of residence while still collecting taxes from non-retirees.
  - drewg123 8y ago
    This 100% I was disappointed they didn't have photos of row after row of poorly maintained multi-million dollar single-story ranch houses in the Bay Area. My old neighborhood in Mountain View was filled with retirees who were paying next to nothing to stay in the houses they bought in the 60s and 70s. These were the same people who would regularly vote against new housing because it "harmed the quality of the neighborhood." Every time I walked to work, I day-dreamed of how many people could live close enough to walk to work if we could put a 10 story apartment building over each of those junky old Eichlers.
  - virmundi 8y ago
    Then you're showing a lot of favoritism. It's hard to universalize the idea that we should show favoritism. For example, historically we favored handicapped people. This was to their detriment. We paid for their subsistence living since we excluded them from having real jobs. It's not a fallacy if you think people own land. They shouldn't have to pay a yearly fee to keep the government from taking their property. Think about applying the same thing to laptops. Laptops are tools, or at least may be tools, for production and income. Why not tax all laptops owned by software folk as we tax other business goods? In general, this argument seems to come down to "the society provides so much, pay your damn share." How about no, I don't want the society to pay for so much? As a result, I want to pay less.
fapjacks 8y ago
It's important to state here that over-consumption of living space in Sweden means something almost completely different than what an American would think it means. Also, Swedish cities are small compared to American cities, but more dense, and of course more space-conscious in typical European style. Stockholm for example feels much more like Honolulu than Cincinnati. The Swedish housing crisis is basically that Swedes want to live close to the city center, and there simply aren't enough places to live there. If Swedes were willing to bear the burden of a typical American commute on their amazing public transit, nobody in the country would think there's a housing crisis. But there are other considerations at play, too, aren't there? For example, there's plenty of housing available in Kista...
- pimmen 8y ago
  > But there are other considerations at play, too, aren't there? Oh god, yes. The housing crisis is extremely complicated, what we see now in Sweden is the result of a perfect storm. In the 90s Sweden had a surplus of houses from the 80s building craze and municipalities completely stopped building rentals. The municipalities in Sweden are extremely strong too and have a monopoly on what gets built on their land, and they don't want rentals they want expensive homes because expensive homes are inhabited by people paying good income taxes. So, they never took those plans for building new housing complexes off the shelves till very recently (but the municipalities still want expensive homes, especially in the bed communities outside Stockholm, Gothenburg and Malmö). We've also had the start of the fourth baby boom very recently, that's put a lot of strain on our housing market. The kids from the third baby boom in the early 90s grew up to move out and they started getting their own babies. This is what happened in the mid to late 60s too with the people from the first baby boom during WWII grew up and Sweden launched the million program to cope (which the national government can't do this time with the current laws in place, it's up to the municipalities alone to predict this and solve it and they failed or didn't want to solve it). In Sweden getting building permits is a very time consuming ordeal and can cost a lot in legal fees. Building in Stockholm is about twice the price of building in Berlin and will take about twice as long to negotiate with the local regulators. We've had record immigration to the cities in recent years, some from foreign migrants but by far most of it has been internal migrants (since during most of this crisis municipalities could just say no to refugees and cite the housing crisis as a reason for it, which the big cities have taken advantage of multiple times. I grew up in one of the wealthiest parts of Sweden just outside Gothenburg, they've taken in a few hundred refugees since 2008 while tens of thousands of people have moved in from other parts of Sweden). This is also consistent with our previous history; in the 90s we had a very large immigration of refugees but the housing prices still took a dive. And finally, this is just how Swedish culture has evolved and it's happened faster than we've had time to react. Compared to the rest of Europe, Sweden has an unusual amount of people living alone. We move out very early from our parents and divorce is uncomplicated here which instantly creates new demand for housing; where there was previously only demand for one home, now there is a demand for two.

by pimmen 8y ago

seanmcdirmid 8y ago

China lacks a property tax, which is a big reason for their huge housing bubble.

tryonqc 8y ago
You are correct. China only tax when you sell / buy property. The porperty tax "reform" should be in place by the end of 2019 though. I think house prices in china can't really be compared with other country for lots of reasons, eg: they don't own their homes (70y lease), very low interest on loans (1-2%), real estate is seen as a very good investment in china, etc.:)
- seanmcdirmid 8y ago
  The 70 year leases are probably going to be renewed very cheaply/easily as happened in Wenzhou when the middle class made a huge fuss over the early (shorter term) leases ending. The central government had to step in and make the local government renew them for basically nothing. Also, China lacks very good investments (the stock market is still a joke), so real estate is seen as the only viable option to beat inflation. So even in hot markets like Beijing and Shanghai, lots of nice apartment buildings will have empty units, which are just being held as an asset and are not even renovated to be rented out. China is not really that unique from other countries, it’s real estate market is quite expected considering the factors that created it.
  - baybal2 8y ago
    Indeed, feel to be 1-to-1 parallel to property bubble in 200x Russia, except scaled to the size of China: Russian law effectively prevents people who can't pay for a personal financial lawyer to invest abroad, and for the short period of time the fun lasted people were investing in even crazier vanities than Chinese do now. I believe that "you can't invest abroad unless you have money for a legal counsel" applies to a lot of countries. Adding to you point on property taxes: Russian provinces with regional property taxes only saw, i think, 1/10th of the bubble in comparison to the rest of the country. At the time when an average private individual could buy 5 flats in 3 years in hopes of bubble growing faster than than interest on his loan, it will be pretty expensive to pay even 0.75% property tax, as it can easily be bigger than guy's annual income.

virmundi 8y ago

Here's a counter-argument. Keeping property taxes means that old people have to pay yearly rent to the government to simply keep their house. In Florida that's about 2k a year for my home. That's fine when we have an income. It's a bit more problematic when that's 10-20% of a yearly retirement income from which one also has to pay for necessities. As to the housing crisis, what laws are preventing multistory buildings? SF blocks a lot of housing over 3 stories since they want to keep the mystique of the city from the Full House days (https://en.wikipedia.org/wiki/Full_House https://en.wikipedia.org/wiki/Full_House). This makes housing extremely expensive since no one can easily put up a 50 story luxury housing apartment complex (which could have 1.5k sq/ft for a mere $675k).

cletus 8y ago
It's this kind of nonsense that allowed abominations like Prop 13 in CA to pass. This particular fallacy is a classic false dichotomy. It's not an either-or situation. In CA the incumbents voted themselves a massive tax break ("because retirees") when, if retirees were something you really cared about, you could simply give them a lower rate of tax or no tax at all for their principal place of residence while still collecting taxes from non-retirees.
- drewg123 8y ago
  This 100% I was disappointed they didn't have photos of row after row of poorly maintained multi-million dollar single-story ranch houses in the Bay Area. My old neighborhood in Mountain View was filled with retirees who were paying next to nothing to stay in the houses they bought in the 60s and 70s. These were the same people who would regularly vote against new housing because it "harmed the quality of the neighborhood." Every time I walked to work, I day-dreamed of how many people could live close enough to walk to work if we could put a 10 story apartment building over each of those junky old Eichlers.
- virmundi 8y ago
  Then you're showing a lot of favoritism. It's hard to universalize the idea that we should show favoritism. For example, historically we favored handicapped people. This was to their detriment. We paid for their subsistence living since we excluded them from having real jobs. It's not a fallacy if you think people own land. They shouldn't have to pay a yearly fee to keep the government from taking their property. Think about applying the same thing to laptops. Laptops are tools, or at least may be tools, for production and income. Why not tax all laptops owned by software folk as we tax other business goods? In general, this argument seems to come down to "the society provides so much, pay your damn share." How about no, I don't want the society to pay for so much? As a result, I want to pay less.

fapjacks 8y ago

It's important to state here that over-consumption of living space in Sweden means something almost completely different than what an American would think it means. Also, Swedish cities are small compared to American cities, but more dense, and of course more space-conscious in typical European style. Stockholm for example feels much more like Honolulu than Cincinnati. The Swedish housing crisis is basically that Swedes want to live close to the city center, and there simply aren't enough places to live there. If Swedes were willing to bear the burden of a typical American commute on their amazing public transit, nobody in the country would think there's a housing crisis. But there are other considerations at play, too, aren't there? For example, there's plenty of housing available in Kista...

pimmen 8y ago
> But there are other considerations at play, too, aren't there? Oh god, yes. The housing crisis is extremely complicated, what we see now in Sweden is the result of a perfect storm. In the 90s Sweden had a surplus of houses from the 80s building craze and municipalities completely stopped building rentals. The municipalities in Sweden are extremely strong too and have a monopoly on what gets built on their land, and they don't want rentals they want expensive homes because expensive homes are inhabited by people paying good income taxes. So, they never took those plans for building new housing complexes off the shelves till very recently (but the municipalities still want expensive homes, especially in the bed communities outside Stockholm, Gothenburg and Malmö). We've also had the start of the fourth baby boom very recently, that's put a lot of strain on our housing market. The kids from the third baby boom in the early 90s grew up to move out and they started getting their own babies. This is what happened in the mid to late 60s too with the people from the first baby boom during WWII grew up and Sweden launched the million program to cope (which the national government can't do this time with the current laws in place, it's up to the municipalities alone to predict this and solve it and they failed or didn't want to solve it). In Sweden getting building permits is a very time consuming ordeal and can cost a lot in legal fees. Building in Stockholm is about twice the price of building in Berlin and will take about twice as long to negotiate with the local regulators. We've had record immigration to the cities in recent years, some from foreign migrants but by far most of it has been internal migrants (since during most of this crisis municipalities could just say no to refugees and cite the housing crisis as a reason for it, which the big cities have taken advantage of multiple times. I grew up in one of the wealthiest parts of Sweden just outside Gothenburg, they've taken in a few hundred refugees since 2008 while tens of thousands of people have moved in from other parts of Sweden). This is also consistent with our previous history; in the 90s we had a very large immigration of refugees but the housing prices still took a dive. And finally, this is just how Swedish culture has evolved and it's happened faster than we've had time to react. Compared to the rest of Europe, Sweden has an unusual amount of people living alone. We move out very early from our parents and divorce is uncomplicated here which instantly creates new demand for housing; where there was previously only demand for one home, now there is a demand for two.