1. How does PPP work for housing? 2. Shouldn't we split land cost from housing cost? Comparing UK with concentration in global city London to an average including rural parts of Colombia seems wrong. Is there a better comparator? - ThreadSky

jmackin2.bsky.social • 52 days ago

1. How does PPP work for housing?
2. Shouldn't we split land cost from housing cost? Comparing UK with concentration in global city London to an average including rural parts of Colombia seems wrong. Is there a better comparator?

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simonpittaway.bsky.social•52 days ago

PPPs for housing are a bit weird - which we admittedly gloss over in this piece. @adamcorlett.bsky.social's paper from last year goes into the housing PPP data in more detail and looks at separate data on aspects of housing quality. https://www.resolutionfoundation.org/publications/housing-outlook-q1-2024/

tobyn.bsky.social•52 days ago

I refer you to @simonpittaway.bsky.social whose Spotlight note looks at PPP calcs. https://www.resolutionfoundation.org/publications/whose-price-is-it-anyway/

jmackin2.bsky.social•52 days ago

But that merely takes PPP as given and adjusts the weights. I mean how does a 3-bed house with a garden near a park in London get compared to a beachfront villa in Medellin, or a condo in New York, or a ranch in Texas?

tobyn.bsky.social•52 days ago

Drilling down to compare idiosyncratic properties will lead to statistical nihilism. And can see that housing stocks in aggregate will differ (UK's is older, and I think smaller), but reckon only comparisons of average aggregate prices could lead to anything remotely useful.

tobyn.bsky.social•52 days ago

A few years ago I had a go at thinking about the gini of physical residential property in the UK. My PC spent a lot of time crashing that day: https://principlesandinterest.wordpress.com/2019/12/20/how-equal-could-uk-property-wealth-be-given-the-current-physical-stock/

jmackin2.bsky.social•52 days ago

But PPP precisely tries to compare idiosyncratic properties- the point is to construct baskets of different but comparable goods in each country. How they do it seems important to understand if using the detailed sector figures - maybe they just assume it away for housing, but that matters too.

gavinjackson.bsky.social•52 days ago

Yes I think that is a reasonable criticism of PPPs but people point out that for the same proportion of their income New Yorkers get much larger houses than Londoners so I think that the substantive point is accurate.

gavinjackson.bsky.social•52 days ago

You could respond that amenities are higher in London than NY (possible but probably a matter of taste) or that crime is much lower but if people value the difference in crime that much we should probably invest a hell of a lot more than we do in stopping it.

jmackin2.bsky.social•52 days ago

I wasn't criticising PPP - just want to know how it resolves these (inevitable) issues for housing. But also let's do a small comparison for ourselves, assumptions inevitable.
1. Since we're journalists: Herne Hill is ~ Hudson Heights. Easy commute, full of journos, family friendly, green space.
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jmackin2.bsky.social•52 days ago

2. Hudson Heights rental, Zillow: $2,500 gets you at best a modern ~900sqft, 2 bedroom flat (tho a nice one you get ~700sqft for $2,750).
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