3 ms·

But if the landlord owns the pub (rare in the UK I know), but I believe it’s the case in this instance, then what are they getting from unrealised property pric

by sefrost 9mo ago

But if the landlord owns the pub (rare in the UK I know), but I believe it’s the case in this instance, then what are they getting from unrealised property price gains?

ehnto 9mo ago
What does anyone gain from it really, except money in the bank for a handful of individuals, outsized property prices seem to be a hurdle for functional societies in basically every way. It doesn't benefit a town if rent is so expensive that their businesses shut down.
- econ 9mo ago
  When young I use to work in construction. (With diplomas) The wages for 18 year olds in the Netherlands at the time were such that I got 340 euro per month for 40 hour weeks. It's a truly shit salary but you could also see it as a wonderful formula to build cheap houses. As my boss billed the customers 28 euro per hour for my work and those houses cost roughly 35000 to buy(!) and it took roughly 80 hours of work each. (Very rough estimates but that oddly doesn't matter) You could say I build 6.4% of the houses. They roughly cost 350 000 euro today which seems 10 fold but since people can't afford that they need a mortgage and pay 3 times that amount over 30 years. That would mean my labor now costs 10 000 per month. At the time I tried to calculate the savings escape velocity and discovered that if I saved 100% of my income I would be able to buy my own house in never years. If I build 6.4% of a house in 2 weeks that would be 3.2% per week or 32 weeks to build 100%. Say 64 weeks and the process produces one whole home for someone else. I get that there should be some people between the construction worker and the citizen eventho they never did anything useful to the result but the margins are so preposterous that the original salary is a mere rounding error. Then I look at Amish barn raising videos and the laughter becomes uncontrollable. I would definitely go there and help out - for free of course. If I had to keep doing that I would look for some vegetables and uhh my own house? Even if they would never build it for me it would still be more enjoyable than the western extortion scheme.
  - deleted 9mo ago
    [deleted]
  - jorvi 9mo ago
    You conveniently leave out that you were making minimum(?) youth wage. In 2026, at 18y minimum wage is €7.36 per hour and at 21y it rockets up to €14.71 Not that youth wage past 18y isn't a stupid concept, but your wage being guaranteed to at least double in ~36 months time is rather relevant.
    - dismantlethesun 9mo ago
      The were making 8.5 per hour which above the 2026 youth wage. They also are relating a story from their past and since they have had an account since 2015, I am assuming their youthful past was at least 1 decade ago if not nearly 20 years ago.
      - hiimkeks 9mo ago
        No, the 340 were per month, the 40 hours are per week. I usually do back-of-the-envelope calculations with 4.3 weeks per month, which would leave them below 2 EUR/h. Edit: But you are of course right about inflation! According to this website[1] it would bump them to 3.2 EUR/h. [1]: https://www.inflationtool.com/euro-netherlands/2005-to-present-value?amount=2&year2=2026&frequency=yearly https://www.inflationtool.com/euro-netherlands/2005-to-prese...
        dismantlethesun 9mo ago
        Even accounting inflation and the youth wage, that wage sounds too low for the Netherlands. It should’ve been at least 450 euro equivalent even in 1990, using 2024 value euros. Source: https://www.boeckler.de/pdf/ta_netherlands_mwdb.pdf https://www.boeckler.de/pdf/ta_netherlands_mwdb.pdf
        econ 9mo ago
        Sounds about right. The point was that market value has very little to do with cost but is driven by intentionally limiting construction permits. Out of the million euro that people have to pay to buy the 350 000 home very little goes towards building it. The surplus of people looking to live someplace isn't an accident. Now let us imagine what it is like running a pub. After subtracting the cost and the 5000 rent bill they probably have a sizable negative salary.
- ipsento606 9mo ago
  As property prices increase, developers are more incentivized to build new properties and increase density. The increase in supply then lowers prices. The problem comes when local laws and the planning permission system make it hard or impossible to increase the supply of homes. Then there's no balancing force to bring prices down when they go up.
  - boringg 9mo ago
    Price rarely ever goes down meaningfully.
  - ehnto 9mo ago
    I certainly agree with your last paragraph, however whilst I believe you're not wrong about the first I don't believe that is the only option for increasing supply. For example, if you look at some of the densest cities in the world they are still predominantly single standing homes, just much more tightly packed, and in homes we can't huild. So I believe zoning and planning are the key issues, and I think property developers would actually play a smaller role in solving the supply problem if you allowed individuals to solve this problem themselves with less strict zoning and planning. Obviously big developments still play a role, but at the stage American cities are often at, NYC excluded, I think zoning being more favourable to medium density would go a long way.
cortesoft 9mo ago
Collateral you can borrow against?
stevefan1999 9mo ago
Leverages and confidence from the credit agency (be it banks or private investments), and the higher possiblity of approving the borrowing, and thus getting more shitty debts to be made, and contribute more to the total Gee-Dee-Pee which is the holy grail those economists chase after
- trgn 9mo ago
  so basically, none of it realized unless they borrow.
  - boringg 9mo ago
    Basically better rates to go into more debt. More importantly (and part of the risk) is that they have a safety hatch if they really need to exit the business.
lotsofpulp 9mo ago
Nothing, but if market value of the land is going up, then that means the price for government services is going up (e.g. government employees need to be paid more, land acquisition or rent costs more, materials cost more, etc). Hence taxes collected have to go up. This could all simply be due to a devaluation of the currency, rather than due to increased desirability or productivity.

by sefrost 9mo ago

But if the landlord owns the pub (rare in the UK I know), but I believe it’s the case in this instance, then what are they getting from unrealised property price gains?

ehnto 9mo ago

What does anyone gain from it really, except money in the bank for a handful of individuals, outsized property prices seem to be a hurdle for functional societies in basically every way. It doesn't benefit a town if rent is so expensive that their businesses shut down.

econ 9mo ago
When young I use to work in construction. (With diplomas) The wages for 18 year olds in the Netherlands at the time were such that I got 340 euro per month for 40 hour weeks. It's a truly shit salary but you could also see it as a wonderful formula to build cheap houses. As my boss billed the customers 28 euro per hour for my work and those houses cost roughly 35000 to buy(!) and it took roughly 80 hours of work each. (Very rough estimates but that oddly doesn't matter) You could say I build 6.4% of the houses. They roughly cost 350 000 euro today which seems 10 fold but since people can't afford that they need a mortgage and pay 3 times that amount over 30 years. That would mean my labor now costs 10 000 per month. At the time I tried to calculate the savings escape velocity and discovered that if I saved 100% of my income I would be able to buy my own house in never years. If I build 6.4% of a house in 2 weeks that would be 3.2% per week or 32 weeks to build 100%. Say 64 weeks and the process produces one whole home for someone else. I get that there should be some people between the construction worker and the citizen eventho they never did anything useful to the result but the margins are so preposterous that the original salary is a mere rounding error. Then I look at Amish barn raising videos and the laughter becomes uncontrollable. I would definitely go there and help out - for free of course. If I had to keep doing that I would look for some vegetables and uhh my own house? Even if they would never build it for me it would still be more enjoyable than the western extortion scheme.
- deleted 9mo ago
  [deleted]
- jorvi 9mo ago
  You conveniently leave out that you were making minimum(?) youth wage. In 2026, at 18y minimum wage is €7.36 per hour and at 21y it rockets up to €14.71 Not that youth wage past 18y isn't a stupid concept, but your wage being guaranteed to at least double in ~36 months time is rather relevant.
  - dismantlethesun 9mo ago
    The were making 8.5 per hour which above the 2026 youth wage. They also are relating a story from their past and since they have had an account since 2015, I am assuming their youthful past was at least 1 decade ago if not nearly 20 years ago.
    - hiimkeks 9mo ago
      No, the 340 were per month, the 40 hours are per week. I usually do back-of-the-envelope calculations with 4.3 weeks per month, which would leave them below 2 EUR/h. Edit: But you are of course right about inflation! According to this website[1] it would bump them to 3.2 EUR/h. [1]: https://www.inflationtool.com/euro-netherlands/2005-to-present-value?amount=2&year2=2026&frequency=yearly https://www.inflationtool.com/euro-netherlands/2005-to-prese...
      - dismantlethesun 9mo ago
        Even accounting inflation and the youth wage, that wage sounds too low for the Netherlands. It should’ve been at least 450 euro equivalent even in 1990, using 2024 value euros. Source: https://www.boeckler.de/pdf/ta_netherlands_mwdb.pdf https://www.boeckler.de/pdf/ta_netherlands_mwdb.pdf
      - econ 9mo ago
        Sounds about right. The point was that market value has very little to do with cost but is driven by intentionally limiting construction permits. Out of the million euro that people have to pay to buy the 350 000 home very little goes towards building it. The surplus of people looking to live someplace isn't an accident. Now let us imagine what it is like running a pub. After subtracting the cost and the 5000 rent bill they probably have a sizable negative salary.
ipsento606 9mo ago
As property prices increase, developers are more incentivized to build new properties and increase density. The increase in supply then lowers prices. The problem comes when local laws and the planning permission system make it hard or impossible to increase the supply of homes. Then there's no balancing force to bring prices down when they go up.
- boringg 9mo ago
  Price rarely ever goes down meaningfully.
- ehnto 9mo ago
  I certainly agree with your last paragraph, however whilst I believe you're not wrong about the first I don't believe that is the only option for increasing supply. For example, if you look at some of the densest cities in the world they are still predominantly single standing homes, just much more tightly packed, and in homes we can't huild. So I believe zoning and planning are the key issues, and I think property developers would actually play a smaller role in solving the supply problem if you allowed individuals to solve this problem themselves with less strict zoning and planning. Obviously big developments still play a role, but at the stage American cities are often at, NYC excluded, I think zoning being more favourable to medium density would go a long way.

cortesoft 9mo ago

Collateral you can borrow against?

stevefan1999 9mo ago

Leverages and confidence from the credit agency (be it banks or private investments), and the higher possiblity of approving the borrowing, and thus getting more shitty debts to be made, and contribute more to the total Gee-Dee-Pee which is the holy grail those economists chase after

trgn 9mo ago
so basically, none of it realized unless they borrow.
- boringg 9mo ago
  Basically better rates to go into more debt. More importantly (and part of the risk) is that they have a safety hatch if they really need to exit the business.

lotsofpulp 9mo ago

Nothing, but if market value of the land is going up, then that means the price for government services is going up (e.g. government employees need to be paid more, land acquisition or rent costs more, materials cost more, etc). Hence taxes collected have to go up. This could all simply be due to a devaluation of the currency, rather than due to increased desirability or productivity.