Fresh Economic Thinking

Would you believe that the same stories told in Australian housing debates about a lack of supply were dominant in Toronto, Canada, right up until the bust?

I speak with Canadian real estate analyst and broker John Pasalis about how the market has changed in the past few years in Canada—from a speculative mania, to a sudden stop, to a new slow grind.

Amongst it all, new apartment construction has plummeted, banks are facing numerous financing risks, and the outlook is soft.

We also pick up the importance of the post-COVID immigration boom on the housing story.

Find John’s Move Smartly podcast here, and follow him on Twitter here.

As always, please like, share, comment, and subscribe. Thanks for your support. You can find Fresh Economic Thinking on YouTube, Spotify, and Apple Podcasts.

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Regular co-host Jonathan Gadir pushes back on my claim that Australia’s economic complexity is fine. Can a more complex economy generate better job choices and higher wages? Is it really okay to outsource the production of fundamental ingredients to a modern economy to other nations? Is Cameron just spouting nonsense neoclassical economics?

Tune in to hear these questions answered, and find the original article here for paid FET subscribers:

As always, please like, share, comment, and subscribe. Thanks for your support. You can find Fresh Economic Thinking on YouTube, Spotify, and Apple Podcasts.

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Interested in learning more? Fresh Economic Thinking runs in-person and online workshops to help your organisation dig into the economic issues you face and learn powerful insights.

Too often, the public debate about housing focuses on costs and ignores investment returns to property owners.

Mike Fellman was an economist at Freddie Mac and is now a property investor. He explains in this conversation how important the investment dynamics in housing are for understanding what gets built where.

Find Mike on Twitter/X here and read his “thread of threads” that explains many of the misperceptions about the financial drivers of housing markets here.

As always, please like, share, comment, and subscribe. Thanks for your support. You can find Fresh Economic Thinking on YouTube, Spotify, and Apple Podcasts.

Theme: Happy Swing by Serge Quadrado Music—Creative Commons Licence CC BY-NC 4.0

Interested in learning more? Fresh Economic Thinking runs in-person and online workshops to help your organisation dig into the economic issues you face and learn powerful insights.

How do organisations that emerge to help people end up degrading over time and becoming a plain old shakedown?

That’s the topic I discuss with regular co-host Jonathan Gadir.

Although we don’t mention it, my book Rigged, co-authored with Paul Frijters, explains many of the economic mechanisms behind the degradation of institutions into what could be described as a rent-seeking mafia.

As always, please like, share, comment, and subscribe. Thanks for your support. You can find Fresh Economic Thinking on YouTube, Spotify, and Apple Podcasts.

Theme: Happy Swing by Serge Quadrado Music—Creative Commons Licence CC BY-NC 4.0

Interested in learning more? Fresh Economic Thinking runs in-person and online workshops to help your organisation dig into the economic issues you face and learn powerful insights.

Will rent control destroy your city? Or is this a slogan economists use to signal their tribal allegiance?

Cahal Moran, aka Unlearning Economics, discusses his intellectual journey into economics and the discovery of many shortcomings of how economics is taught and practised.

Cahal’s latest Current Affairs article is called Rent Control is Fine, Actually.

Watch all his YouTube videos here, and find his terrific video on rent control we discussed here.

As always, please like, share, comment, and subscribe. Thanks for your support. You can find Fresh Economic Thinking on YouTube, Spotify, and Apple Podcasts.

Theme: Happy Swing by Serge Quadrado Music—Creative Commons Licence CC BY-NC 4.0

Interested in learning more? Fresh Economic Thinking runs in-person and online workshops to help your organisation dig into the economic issues you face and learn powerful insights.

With all the cost-of-living crisis talk these days, you might wonder if it is possible for young Aussies to get ahead financially. But there is a group of people out there winning the financial game of life with their approach to financial independence.

The perfect guest to discuss personal financial habits is Matt, who runs the Aussie Firebug website, where he documents his journey of to financial independence, retire early (FIRE). It is well worth checking out if financial independence is on your agenda.

A couple of years back, Matt hosted a debate between me and Scott Phillips on superannuation, which you can listen to in two parts below.

As a financially independent person, Matt was able to start multiple businesses, one of which is a co-working business called The Collective Co-space. You can find it here.

As always, please like, share, comment, and subscribe. Thanks for your support. You can find Fresh Economic Thinking on YouTube, Spotify, and Apple Podcasts.

Theme: Happy Swing by Serge Quadrado Music—Creative Commons Licence CC BY-NC 4.0

Interested in learning more? Fresh Economic Thinking runs in-person and online workshops to help your organisation dig into the economic issues you face and learn powerful insights.

Taxpayers Alliance Chief Economist John Humphreys joins the FET podcast to talk all things tax. Is it possible to tax unrealised gains, as is proposed on superannuation accounts over $3 million in value? Maybe. But why bother doing it when it mostly changes the timing of taxation rather than the revenue?

We speculate as to whether it is a daring political manoeuvre—propose something you know your opposition will find outrageous to trick them into arguing for exactly the tax setting you actually want.

Enjoy this conversation on taxes, strange politics (where was this super-tax conversation pre-election?), my favourite topic of Effective Marginal Tax Rates, and more.

Side note: One thing John and I have in common is that we both want to scrap the superannuation system. I explain my reasons in this article.

As always, please like, share, comment, and subscribe. Thanks for your support. You can find Fresh Economic Thinking on YouTube, Spotify, and Apple Podcasts.

Theme: Happy Swing by Serge Quadrado Music—Creative Commons Licence CC BY-NC 4.0

Interested in learning more? Fresh Economic Thinking runs in-person and online workshops to help your organisation dig into the economic issues you face and learn powerful insights.

Given the Australian media’s obsession with the housing crisis, it would come as a shock to many that the share of after-tax disposable income spent on rent by renter households is lower in 2025 than it has been for most of the last decade.

But that’s what ANU Professor Ben Phillips found in his latest research on rental affordability (you can find it here or download it below).

In today’s FET video podcast, I chat with Ben about this surprising data and how we can make sense of it in light of current housing “crisis” debates.

A key part of the story is this chart. It shows the share of disposable income (after-tax) income spent on housing for renter households. Notice that the most unaffordable period by this metric was 2012-2018.

The situation is not great for renters on the lower incomes.

There are people struggling at the bottom of the income distribution to keep up and rent where they previously could. But they are struggling to compete with those household who can pay higher rents.

One interesting part of our discussion was the big difference between the price growth in rent advertisments and price growth of rents paid by all renter households. The chart below, from Ben’s report, shows that advertised rents (in this case using Corelogic’s data) diverge from rents paid by all renters in a cyclical way, and by a surprising amount, with advertised rents being between 10% and 40% higher than rents paid by all renters.

Currently, the gap is near record highs.

The existence of a gap comes from the fact that turnover in the rental market is about 2.5% per month, or 30% per year, and the distribution is such that some properties turnover more than others and hence appear more regularly in the advertised rental figures. But why is the gap so cyclical?

We also chat about the fierce media debate playing out around the proposal to increase tax on the gains in superannuation accounts for the marginal amount over $3 million, which is just the top 0.5% of accounts.

This has been a hot topic online.

We chat about the feverish and unhinged reaction to what is a minor tightening up of an overly generous tax break that affects very few people.

And if you missed my recent deep dive into why scrapping superannuation could make us all better off, try this article.

As always, please like, share, comment, and subscribe. Thanks for your support. You can find Fresh Economic Thinking on YouTube, Spotify, and Apple Podcasts.

Theme: Happy Swing by Serge Quadrado Music—Creative Commons Licence CC BY-NC 4.0

Interested in learning more? Fresh Economic Thinking runs in-person and online workshops to help your organisation dig into the economic issues you face and learn powerful insights.

There is an interesting debate taking place in urbanist circles.

Is more density good for families because it helps reduce housing costs, or bad for families because it creates a lifestyle and environment that is not conducive to large families?

Indeed, we might consider changing our policies and regulations based on what we think is the answer to this question.

But do we have a reasonable answer?

Daniel Hess runs the More Births Substack and is on Twitter @MoreBirths. Daniel has taken up the case against density because of its potential fertility effects and is my guest for this FET podcast video episode.

Here is one of his articles on the topic.

But Daniel is not alone in his concerns. The negative correlations between urban density and fertility are clear to many.

In this episode, we discuss global and national fertility trends, and I push Daniel to justify why we should be concerned about these trends—after all, low-fertility places are the better places to live, have more opportunities for women, and many nations historically encouraged lower fertility to generate economic growth. In Hong Kong, the saying was “Two is enough”. In South Korea, it was “Stop at two, regardless of sex”. In Bangladesh, it was “One child is ideal, two children are enough”.

Were they all wrong?

I press Daniel to make the case for why low fertility is so bad, given that low fertility countries are generally the most desirable ones to live in.

Here are three previous FET articles on the general topic, which show that I am not so concerned about declining fertility.

A main issue Daniel identifies when it comes to the effect of housing density on fertility is the step-change in appropriateness of housing for families when increasing density from detached homes to apartments, even if the internal space in each dwelling is similar. Because of this, suburbia could be the secret sauce for high fertility.

This makes intuitive sense to me.

My own home is about 100 sqm internally, which is not too different from many nearby apartments. But it is on a 300 sqm lot and is therefore much more family-friendly than the 100 sqm apartments available in buildings just down the road.

Maybe intermediate densities, like the small homes and townhouses that are more popular in new subdivisions these days, can still be as conducive to family formation as homes on large lots while economising on space and infrastructure.

Unfortunately, this density is the most difficult to promote in existing areas where incremental change to much higher density and towers is usually the most economical for the property owner.

We didn’t have a chance to dig into the popular idea in urbanist circles that the market will accommodate all needs at all locations, but regulations prevent large apartments that can accommodate families from being built. If we could deregulate to unleash the large-format family apartment, then this fertility and density issue might be resolved.

For example, here’s one such statement

The fastest growing category of Toronto homes have zero bedrooms: Bachelor units grew by 28 per cent, jumping from 22,355 to 28,765.

"Basically, the only housing getting created in Toronto tends to be high-rise: 30, 40, 50 storeys," Mr. Moffat said. It's hard to put in units with three-plus bedrooms in those types of buildings.

A mix of high land costs, restrictive zoning, using investors as preconstruction funders and high development charges pushes builders away from creating family-style units, according to Mr. Moffatt.

I think such claims are 180 degrees wrong on the effect of regulations. Generally, if town planning rules limit housing types, they do so by preventing apartments so that detached homes are built instead, or requiring apartments that are built to be above a minimum size (or, in the language of The Great Housing Hijack, they restrain uses below the density equilibrium).

But even having more three-bedroom and larger apartments would miss the step-change benefit of detached housing for families.

Daniel comes down on the side of zoning regulations that promote detached homes where they would otherwise not be the market outcome.

A key economic pattern that comes up in our conversation is that although young people have many detached housing options in smaller towns, they still commonly move to large cities and pay a premium to live in smaller apartments.

For example, in Japan, small towns are giving away houses for free to try and attract families. In Australia, as in most places, housing is large and cheap in regional towns, yet the young people who grow up in those towns usually leave for higher-density places.

Should we take this as evidence that low fertility and higher density lifestyles are a choice being actively made? If so, why is it bad?

Finally, what of fertility policy?

Should we pay a $5,000 per-child baby bonus, like Australia has done, and now Donald Trump is proposing? Or are social and cultural factors more important? After all, a lot of the decline in fertility was promoted through intentional moral suasion and cultural shifts, so perhaps this is the way it will reverse.

I hope you enjoy the episode. I am keen to read comments from you all.

As always, please like, share, comment, and subscribe. Thanks for your support. You can find Fresh Economic Thinking on YouTube, Spotify, and Apple Podcasts.

Theme: Happy Swing by Serge Quadrado Music—Creative Commons Licence CC BY-NC 4.0

Interested in learning more? Fresh Economic Thinking runs in-person and online workshops to help your organisation dig into the economic issues you face and learn powerful insights.