What IS the housing problem?

An email comes in from Dave Hill (Guardian blogger/journalist): I’ve just discovered your blog and your post about Mayor Johnson’s housing policies and their implications. I’d love to learn more about your work in this area and your conclusions.Regards,Dave Hill; Guardian.  http://commentisfree.guardian.co.uk/dave_hill/ 

Since I just did a short talk on this yesterday at the launch for UEL’s book “London’s Turning: the making of Thames Gateway” I have converted it into text here as a kind of reply to Dave:   

International contextA period of rapid capital accumulation, globally, in the last decade;A great deal of money-capital in the hands of investors, desperately looking for profitable outlets;

 

Authoritarian regimes increasingly dominating the profitable production of goods

In N W Europe profit is being sought in chasing the growth of asset values; increasingly a rentier economy

housing

land and other real estate

retail and service businesses, wireless spectrum

in general: whatever is an ‘under-priced’ asset

fuelled further by low interest rates, de-regulation

1990s complacency that housing problems were ‘solved’ is giving way to an awareness of a crisis

And speculative pursuit of asset values is inherently unstable, as we are now discovering.

 

 UK housing

Investment has been pouring in to housing, property and credit-supply

…but not much of that is going into new production of housing, most into acquisition, chasing up the prices of the stock

= a practical dilemma for management of the economy:

high interest needed to deter credit growth and housing price inflation; but low interest needed for the productive economy. Stability may be unattainable.

= an intellectual dilemma for neo-liberal economics:  rising (house) prices do NOT produce the expected surge in output so problem 

gets worse, not better

 

 

Interpretations of the crisis

Economists’ orthodoxy

markets would equilibrate if permitted to do so

planning is the problem: de-regulate

The alternative view

London’s growth is a poverty machine as well as a wealth machine

the process is a class-relations problem

planning is (an unwitting?) part of mechanism

deal with it through a set of measures aimed at the class-relations directly

(rather an ‘institutional’ view, but more politically explicit)

 

 

Pessimistic scenario – for Thames Gateway, but is generally applicable

Continued polarisation of housing conditions

Housebuilding firms don’t keep up with plan and value for money remains poor

Infrastructure costs (physical and social), revenue costs, a burden

Fiscal stress on public bodies; S106 at best pays initial capital costs

Property values grow but mainly to the benefit of landowners, developers and established owner-occupiers

 

 

 

Changes needed

Measures to swing investment away from ‘rentier’ speculation in asset-value growth, to production

through tax changes

through pensions reform

through changing the balance of power between owners, occupiers and lenders

Land policy reforms, learning from Holland, Vienna, Zürich, etc

and from our own C18th, New Town and colonial experience

 

Optimistic scenario for Thames gateway

Freeholds transferred into development trusts

sharing value-growth through ground-rent reviews

S106 dropped (and PGS)

Infrastructure funding with “English Urban Bonds”

New kinds of development structures, firms

Management of land banks gives way to production skills as source of profit

scope for private developers, RSLs, co-ops

large and small enterprises

Cap on Central London employment growth

diversion of growth to suburban and regional centres and other parts of UK

radial infrastructure more efficiently used, less costly

Conclusion and comment to Dave…1. I can turn this into more accessible prose if you want: you can see that it’s points for a talk s it stands.2. It is wrong SIMPLY to blame banks / lenders / big corporations / developers (as the SWP tends to do) because the process includes all of us who are owner-occupiers or paying mortgages. The so-called ‘housing ladder’ is really a kind of dredger for money: it collects money from tenants and new purchasers and conveys it up to those who have been owners for longer.  It’s not an exact analogy but it’s better than the ladder.  What I am trying to emphasise is that a lot of different social forrces converge.  3. The problem has become so intractable partly because so many people are now hooked into the process as real or imagined beneficiaries: people who think it’s a good way to save for retirement or to provide for their kids, governments giving subsidies and tax support on the DEMAND side which adds to pressur
e on prices,

4.  The article I wrote over a year ago is at 

Edwards, M (2008) ‘Structures for development: getting them right’ in London’s Turning.  Thames Gateway: prospects and legacies Eds. P. Cohen and M. Rustin. London, Ashgate, 0 7546 7063 5 for chapter see http://eprints.ucl.ac.uk/5016  for book see http://www.ashgate.com/isbn/9780754670636

  

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Author: Ed

staff in the Bartlett School of Planning and cooperating with others in UCL and with the Just Space Network to support London citizens' inpu

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