In response to Allister Heaths article "UK needs to stop deliberately inflating residential land prices" city am , IEA economist Kristain Niemietz made this comment.
"Since you mention Hong Kong: I recall a study which showed that even in this extreme example, a substantial share of house prices is explained by building restrictions as opposed to a genuine shortage of land. Physical scarcity of land is mostly a theoretical possibility. There are hardly any places in the world where that is a binding constraint yet.
And of course, national figures on population density are entirely misleading. If that was a factor, house prices in Australia should be close to zero, but in fact they're among the highest in the world because Australia operates British-style planning restrictions. For obvious reasons, people don't want to live in the Australian outback, but in commutable distance to the population centres, which is where the planning constraints apply."
Leaving to to one side Australian homes are three times the size here in the UK, is Niemietz really saying that if the Government just got out of the way of free-markets, not only would land values fall to zero, but so would the price of bricks and mortar?The power of free-markets. Wow!!
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