Max Neutze

The Supply of Land for a Particular Use

A number of features of land markets in and around cities are not well explained by existing theories of the allocation of land. Although there has been a good deal of work on the demand for urban land, in particular how the demand varies with distance from major centres of activity, relatively little attention has been given to the supply of land for urban uses, or for particular urban activities within cities. Recent articles by Evans (1983) and Wiltshaw (1985) have put more emphasis on factors affecting supply. Using a quite different approach Titman (1985) has also added to our understanding of the supply process. The supply of land is generally assumed to be fixed in the aggregate so that the aggregate supply curve is vertical. Supply of land to a particular activity, however, is very elastic as land will be used for that purpose which yields the highest rent; in principle the supply is perfectly elastic. Ricardo qualified this by recognising that land varies in fertility and von Thunen by recognising that land varies in location. Alonsos model applies the method of von Thunen to an urban context. Both the von Thunen and Alonso models assume that land will be used for the activity that can pay the highest rent so that land in a given location will have a horizontal supply curve for any given use, its level being its rental value for its next most profitable use. Among the puzzling features of urban property markets is the fact that vacant and under-utilised land can be found in close proximity to highly developed land. Around the fringe of cities this produces scattered development, which is difficult and expensive to service and makes the areas unattractive as well as taking land out of rural production a good deal earlier than is necessary to provide for urban requirements. Something similar occurs within cities when individual sites in and close to commercial centres are used for low density housing or for surface car parking. Both kinds of mixtures of land uses of very different densities often continue for long periods of time. Another feature that requires explanation is the considerable margin that exists at the urban fringe between the price of land used for urban purposes and its price (value) for non-urban purposes. The models of Alonso (1964) and others that focus on demand implicitly assumed that at the margin of a city land for urban use could be purchased at a price only slightly above its rural value: just enough to bid it away from farmers. In reality, even at the urban fringe, urban values are frequently many times rural values. Again the same phenomenon occurs within cities where land used for commercial or office development generally changes hands at much higher prices than residential and industrial land even where they abut one another. Together these two puzzling features produce situations where land at margins between different uses has a much higher market value than its current use value over a long time period and yet no development or redevelopment occurs.

Housing for Indigenous Australians

Indigenous Australians suffer from less adequate and affordable housing than any other group despite the efforts of national and state governments, especially in the past 30 years, to improve them. Among the reasons for their continued poor housing are their poverty, the different values placed on housing by the more collectively oriented Indigenous people and their lack of control over the housing that has been provided for them. The Community Housing Program, under which government funded housing is provided and managed by local Indigenous housing organisations, has had some success in resolving these problems. A promising solution to the problems of the housing organisations may be found in umbrella organisations that are beginning to develop which can ensure both rent collection and accountability to funding governments and community control over housing design and management.

Managing publicly owned land in Canberra: Rural to urban change of use

All land in the Australian Capital Territory (ACT) is government owned. Prior to 1989, when the ACT became self-governing, the government developed land for urban use and auctioned leases for parcels of land for specified uses. Since then, leases for raw land have been auctioned for private development, to be completed within a specified time. A case study of a development where the ACT Government aimed to increase urban densities shows that the result was a reduction in quality. In addition, the financial returns to the ACT Government were much lower than if it had undertaken the development itself.

Costs of owner‐occupied and rented housing

Abstract The conventional wisdom holds that the tax system reduces the costs of owner‐occupied relative to rental housing. While correct when there is no inflation the paper shows that the reverse can be the case in periods of inflation, especially in Australia where mortgage payments by owner‐occupants are not tax deductible and, until recently, capital gains were not taxable. Rents, however, have not fallen as much relative to prices as the model used would predict.

Assessing betterment under a public premium leasehold system: principles and practice in Canberra

This article sets forth principles for assessing betterment under a public premium leasehold system of land tenure. Canberra, Australia, is employed as a case study. Recovery of the betterment which results as the city grows has been an important objective of public land ownership in Canberra. Up-front premiums and betterment charges replaced land rents in 1970. Betterment charges are applicable when permission to change land use is granted and there is an increase in the value of the lease. Different definitions used over time have failed to measure betterment correctly. A correct definition is derived, and it is argued that a 100% charge should be levied to maintain the governments ownership of development rights. Such a charge would not stifle redevelopment but would remove the subsidy it currently receives.

Urban land policy in Australia

Australia is very sparsely settled, with a population of only 14 millions in an area of 7.7 million square kilometres. The main reason is the low rainfall over most of the country: nearly two-thirds of the area has a median annual rainfall of less than 400 mm. The dry inland areas and the wet tropical fringe in the north are both thinly settled. The population is concentrated in a narrow coastal crescent around the south-eastern part of the continent and a much smaller area in the south-western corner.