You can't explain real estate bubbles by zoning controls

For corroboration that a land price bubble is the result of inadequate rent capture, Cox and Moran could do worse than consider the early affects of Canberra’s land rent system. Public rent capture in the ACT initially kept both land prices and local taxation at bay, until the system was eventually undermined by the failure to maintain land rent payments at anywhere near market levels.

Since then, vested interests and ignorance have done their darndest in the ACT to ensure that there’s no difference between what is now only a nominal land rent system and freehold ownership in Australia.

Interestingly, when there was once no damaging income tax, it was often incumbent upon the freehold owner to pay his annual "quit rent" if he wished to remain in possession of his property. (Owe[n]er: Middle English: He who owes the land rent).

Contrary to Demographia’s conclusion, my 2007 study “Unlocking the Riches of Oz: A case study of the social and economic costs of real estate bubbles 1972 to 2006” shows the international fashion for reducing land and property taxes, which has amounted to a virtual contagion from the outset of the 1970s, to have been responsible for stimulating each of Australia’s four real estate bubbles.

In an explosion of purple rage to the Heartland Institute on 4 July 2007, Wendell Cox castigated me for being anti-suburban for having pointed out his logical error in blaming zoning controls for bubble residential prices. I also showed the US cities he held so close to his heart for having the least zoning controls also had the highest crime rates in the United States. His own home city of St Louis topped the US crime list with its incredibly high murder rate. To let municipalities grow in an unbridled fashion in an environment of high taxation and inadequate infrastructure invites poverty and criminal behaviour.

Hopefully, the strange conclusions Cox and his fellows draw from their data will one day come to be seen for the canards they are. Meanwhile, the press will continue to report them dutifully as fact.