17 April 2006

Another suggestion for building

My last post suggested opening up areas for New Towns in order to provide more housing.

We are in the realm of political compromise here - the ideal would be to deregulate land use more or less entirely.

In the same spirit of compromise, Mischa Balen of the Adam Smith Institute has put forward another possibility - large scale low-density housing, combined with woodland and animal habitat, across the "green belt". The value in this is that much of the undesirable effect of more housing is specifically an effect of very high-density development, which itself is the result of releasing very small amounts of land for building.

A good idea to throw into the mix (I haven't read the actual pamphlet yet).

06 April 2006

The housing puzzle

chris dillow is worried about high house prices.
In my day job, I point out that a single person must be in the top 3% of earners if s/he is to afford the average house. My gut instinct is that this is not a desirable state of affairs.

I certainly would go along with chris's instincts. In general it is good if stuff is cheaper and we can have more of it, and housing is not any different. Better housing improves quality of life, and improves efficiency as people are able to store stuff, stay with friends, and so on. Not least, it is good for future generations - an apartment is OK for a single or a childless couple, but if you want to reproduce you need more space.

chris says "A few months ago, I’d have said: 'nothing, prices will fall and the market will solve the problem.'" - a rare misjudgement. The market may be able to supply, for instance, heroin, at a reasonable price to all who want it, but as I observed previously, the government's war on housing is vastly more effective than its war on drugs.

chris asks, "what should be done?" - well, what should be done is to end the war on housing. The war on housing is driven, as I see it, by two factors:

The first is the political influence of house-owners. Allowing house prices to fall to a reasonable level would hit very badly those who currently own houses. (It might also hurt those who lent them the money - although a large number of new cheap houses coming on the market and being bought by first-time buyers would compensate the lenders somewhat for the bad debt on the currently high-priced houses.) As I observed previously, that is only part of the impact; increasing the supply of houses will reduce the price of houses in the normal way, but it will also redistribute value away from houses that are ideally situated given the current setup:
The best places to live are on the edge between the city, with its civilised amenities, and the countryside, with its space and pretty landscapes and fresh air. It is expensive to live in such places, so the people living there are the rich and the powerful. If you build on the countryside next to them, you're having negligible effect on the balance of the country as a whole, but you have a severe effect on those rich and powerful people who no longer have the best of both worlds, but are now part of the urban sprawl.

The second factor is the illusion that Britain is overcrowded. I have heard it suggested that this is only ever a smokescreen covering the sectional interest of property-owners, but I am sure many intelligent people believe it, even when it would be in their interest to increase the housing supply.

Again, what should be done? In theory, the interests in continuing artificial scarcity of housing should be at least balanced by the interests of those who would benefit by ending it. If the property-owners are able to maintain their advantage, it might be because, unsurprisingly, they are group - one could perhaps even say a class - with disproportionate political influence.

But to a large extent I think the scales are being tipped by the ignorant - those who would dearly love an affordable house, but not at the price of Britain being "tarmaced over". We need to scream from the rooftops the vast amount of land in this country being used for nothing more useful than unnecessary subsidised industrial farming. The media always measure drugs seizures in terms of the retail "street price" - we should always refer to farmland in terms of the value it would have if built on - say 500 million pounds per square mile.

The other avenue to ending the war is to avoid the secondary effect on existing property-owners by building "new towns". This could be done either privately or by the government (obviously, I would prefer to see it done privately), by allowing building over large areas which are currently undeveloped. The current owners of the land would obviously benefit, but even rural dwellers outside the designated area would be winners rather than losers, as their property would be in key high-end commuter territory for the new town.

I emphasise this is inferior to permitting building generally - I put it forward as potentially more acceptable politically.

The problem with the plan is transport - the lavish provision of the London and "Network South-East" rail and road networks is sufficient to strongly discourage anyone from going elsewhere. It might be possible to have the developer of the new town responsible for providing transport links, but that has a danger of turning into a vast "public-private partnership" corruption-fest. In any case, public projects such as the 2012 Olympics development (spit) will be tying up resources to the extent that it will be difficult to provide effective transport at any price.

I just want to finish by saying that I consider this issue the single biggest problem facing Britain, ahead of war, terrorism, global warming, crime, obesity, measles and Gordon Brown.