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Land and real estate markets lecture notes
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(Parayitam, 2005)Land and real estateMarkets Notes
Lecture 1 4-9-2024
Course organisation
Four main topics p
Property rights and urban planning
Planning interventions
Dynamics of land and real estate markets
Land management strategies and value capturing
Planning studio
6-person groups
Group work , -> consultensy ferm -> com with a plan for a municipality -> feasibility study
(financial and other studies) -> report -> presentation
(look at bright space)
Elective course
Placemaking and spatial practices or tussen maatschappelijke m
Lecture
Housing crisis: Verry difficult for first time buyers
Insider outsider problem (parents could buy a house)
Most social housing in the world
Those who social rent housing (good houses, good prices)
No doorstroming (social housers can not move to the other markets (not enough money to buy ore
privet marked is sik).
Speed up housing production -> more houses -> prices will go down
Question marks: Do they build the right types of houses?
Larger houses make more money…
Compromise: (1/3 social rent, 1/3 social buy, 1/3 other)
Question raised by dutch competition authority:
- How competitive is housebuilding market? Will other take over if one fails?
- How to measure market concentration?
(elastic supply: if supply increase with 1% the prices will increase with 1%)
The dutch housing market is not elastic because: planning process, housing density, public prefer of
urban land transformation.
Difference in land value (dependent on the calculation do they pay for new roads trains etz. )
Urban land transformation area = more expansive than greenfield transformation area.
The dutch house building marked shortage is unic in similar countries there is a simmlar trents
,One solution to make more houses,-> develop more plans-> lager plan capacities
50% of soft plands is hart after 9 years
After planning it causes 2,5 year until first construction ( first 50 %) (because fighting the permit,
rising building cost, market conditions, are there other construction projects can household buy a
similar home somewhere else (market concentration)).
Netherlands unused building permits is similar to the Germany
How to define markets new homes?
In the issues of how to define a market
- New homes
- Existing homes
1/3 of population does not care, 1/3 of population want new homes, 1/3 of population want existing
homes.
What causes concentration; and what are the effects?
Geographical market
- Houses in region?
- Houses in a municipality?
- Houses in a country
Most of the Consumers are looking in a municipality
How to calculate market concentration?
In Hefindahl – Hirschaman index
Most of the Netherlands (most municipalities) highly concentrated marked. The developers of new
homes have high marked power.
Does high marked power have bad consequences? There is a correlation in delay of new plans with
concentrated markets.
L2
5-09-2024
How to adapt to climate risks? A lot of funding is needed, dutch are front runners.
Both plangin decision to change the land use and public infrastructure investments may lead to
substantial increase in land values.
Without any regulation that land value will go as a windfall forfit to landowners and developers
Public investment and government actions: for infrastructure of facilities like library or climate
change.
Local -> climate adaptation
National -> climate midigation
Plak pp..
Rual -> urban land -> landprice huge land value increase (400x more valuable)
Land value capture of urban landprice for climate action (or infra or whatever)
, There are correlations between property prices (or make it down to land value) and environmental
risk. This could be urban heat ilands floots air pollution etz.
Virtuous circle
The circle of were landvalue capture is possible
Vicious circle
The circle were not is capitalised on the increase of land value by other influences
Politic: like other collective goals where money can be spent.
Land base finance is a incentive to invest in more expensive homes -> gentrification
If nothing is build, there is no uplift in land values
Some dutch Cities lack effective regulation and capacity.
Ronald Coase: property rights theory
Public
Property economics
Conditions:
- Property rights must be defined clearly and transparent for eveeybody
- Transparency leads to a more efficient outcome.
- Transaction costs should be low
Example: co2 emission rights
If there would be no transaction cost in the economy and if propery rights would be assign in a
transparent way, then the solution of problems of social costs (negative externalities) would not be
problematic.
However
The assignment of propertyrights is almost never transparent
That is why markets must be regulated by institutions
Urban planning can be considered as one of these institutions
Elinor Ostrom
- “Free people can overcome the ‘Tragedy of the Commons’
- Create right institutional conditions to stimulate “self- organizing mechanisms”
- (Alternative to 1) government intervention or 2) marketization
Henry Goeorge
Single tax on land
Non-financial compensation: transfer development rights
New York: Air rights -> prevented park
The government took the air rights and compensated with development right of other aeras. New
marked was created without money incentive
Non-financial compensation: transferable development rights:
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