Land Markets and Business Cycles
in the United Kingdom and Australia

David Richards



  1. Banks, R, Costing the Earth, London: Shepheard-Walwyn, 1989, p.39, 46. £23 bn capital consumption was omitted from the 1988 house buildings value calculation (CSO Blue Book 1991, p.100), raising the land residual to 53% of total British housing stock value, as against 35% in 1985. Banks (p.39) calculates the capital value of all land in GB in 1985 to have been about £500 bn, or 43% of the £1160 bn relevant asset value in the national balance sheet (1991 Blue Book, p.90). The Central Statistical Office has not produced national balance sheet figures for 1988, but the percentage of land to total real estate value would have been above the 53% estimated for dwellings.
    ... For the USA, Mason Gaffney concluded in 1970 that "land value today is at least half of real estate and probably more" ("Adequacy of Land as a Tax Base," in The Assessment of Land Value, ed. Daniel M. Holland, Madison: Univ. of Wisconsin Press, 1970, p.181). For Australia, R.H.Scott reported that land comprises less than 40% of the aggregate price of land and improvements (The Value of Land in Australia, Centre for Research on Federal Financial Relations, Research Monograph No. 47, Canberra: The Australian National University, 1986, p.3). However, his data preceded the property boom of the late 1980s. For Denmark, Anders Muller reported that the land component of all real estate was as low as 30% in 1986 (Banks, p.169).
  2. The land price changes are from the Department of the Environment's price index of private sector residential building plots at constant average density in England and Wales, as published in its quarterly Housing and Construction Statistics series, London: HMSO. The house price changes are from the Nationwide Building Society's mix-adjusted price index for all houses.
  3. March 14, 1992, p.16.
  4. "Cyclical and Sectional Variations in the Sale of Public Lands, 1816-60," in Review of Economic Statistics (9), 1927, pp.41-53.
  5. One Hundred Years of Land Values in Chicago, Chicago: University of Chicago Press, 1933
  6. Fred Harrison, The Power in the Land, London: Shepheard-Walwyn, 1983, pp. 109-110, 117.
  7. Basic Principles of Economics and their Significance for Public Policy, Columbia, Mo: Lucas Brothers, 3rd ed., 1955, pp. 123-124.
  8. The sources for the land price data are detailed by the author in the two appendices to this chapter. The land price data is based on the sum of all individual site values at July 1st each year. The entries shown for 1961 and 1967 are the average growth rates for 1958 to 1964 and 1965 to 1969, respectively. The other data are taken from various volumes ofthe International Monetary Fund's International Financial Statistics Yearbook and the UK Central Statistical Office's Blue Book. The Melbourne median house price data were compiled by Ross King in Monopoly Rent, Residential Differentiation and the Second Global Crisis of Capitalism, Vol.28, pt.3 in the Progress in Planning series, Oxford: Pergamon, 1987, p.218.
  9. "The Surprising Incidence of a Tax on Pure Rent: A New Answer to an Old Question," in Journal of Political Economy 85, April 1977, pp.350-351.
  10. D.F.Hendry, "Econometric modelling of house prices in the UK," in D.F.Hendry and K.F.Wallis, Econometrics and Quantitative Economics, Oxford: Blackwell, 1984, pp. 226-227.
  11. Op. cit., p. 230.
  12. The Rt. Hon. Robin Leigh-Pemberton, in Glasgow, 23 May 1991 (Bank of England Press Notice).
  13. Kenneth Taeuber, "A Century of Experience with Land Value Taxation," in A. Woodruff, et al., (eds.) International Seminar on Land Taxation, Land Tenure and Land Reform in Developing Countries, Phoenix: John C. Lincoln Foundation, 1967, pp. 136-137.
  14. Op. cit., pp. 3-4.
  15. Comparing Banks' figures, op. cit., p.39, with the UK balance sheet valuation for 1985 in the 1988 CSO Blue Book, London: HMSO, pp. 86-93.
  16. The Australian GDP data are for the fiscal year ending June 31st, and are taken from the 1989 issue of Year Book of Australia (Canberra: Australian Bureau of Statistics) and the OECD series Main Economic Indicators (Paris). The capacity utilisation data for both countries is provided by the latter source.
  17. The Department of the Environment's private residential building land price index has been deflated by an index of money GDP, to indicate the growth in the capital value of the country's land relative to the growth in its annual output. This indicator suggests that the capital value of UK land in 1988 had more than tripled its ratio to GDP of 1963. Of course, the increase in the amount of housing land is not taken into account, nor its value relative to other types of land (a fault overcome in Figure 10).
  18. Using the OECD's "medium" measure of money, "M1 plus quasi-money", in Main Economic Indicators, op.cit..
  19. The breakdown of gross domestic fixed capital spending into its real property related components (dwellings, other new buildings and works, and transfer costs of land and buildings) and other components (plant and machinery, and vehicles, ships and aircraft) for the UK, is taken from the CSO's Blue Book (United Kingdom National Accounts), 1991, p.94, and Economic Trends, Annual Supplement, 1988, p.52. For Australia, the ABS's Australian National Accounts, 1976, p.29, and 1982, p.5, and various issues of the OECD's Main Economic Indicators were consulted. The Australian data differs in that it refers to private sector investment only - generally more than two-thirds of the total.
  20. Ross King's account will be followed here, op. cit., p.221.
  21. IMF, op.cit.; OECD, op.cit..
  22. Land prices (UK) or aggregate land values (Australia) are preferred, but to fill the gaps where they are not available house prices have been used. For the UK, the Nationwide Building Society's average UK house price index is taken from M.C.Fleming and J.G.Nellis, Spon's House Price Data Book, London: Spon, 1987, p.301. For Australia, Ross King's graph of median real house prices in Melbourne is used, op.cit., p.218.
  23. Op. cit., p. 226.
  24. N. Clerehan, 28 Feb. 1972, in Age, quoted in Leonie Sandercock, Cities for Sale, London: Heinemann, 1976, p.145.
  25. Op. cit., pp. 279-280.
  26. The practicability of increasing these taxes, and their revenue raising potential, is discussed by the author in The Sisyphus Syndrome, op. cit..
  27. June 14, 1989, p.3.
  28. Letter to Keith Thomas, published in The Georgist Quarterly, Sydney: Association for Good Government, July 1991, p.2.
  29. Odd Man In, April 4, 1992, p.8.
  30. Reported in the London Financial Times, February 11, 1992.
  31. "Carrot and stick for middle classes", Financial Times, April 13, 1992.
  32. Frank Brennan, Canberra in Crisis, Canberra: Dalton Publishing Company, 1971, pp.107, 111, 143-144.
  33. Ibid., p.156.
  34. Department of Urban and Regional Development, Canberra: Australian Government Publishing Service, 1974.
  35. Ross King, op. cit., p.218.
  36. Fred Harrison, op. cit., p.234.

Main Paper * Appendix 1 * Appendix 2