The falls in central London’s luxury property prices could make housing even less affordable

Oh good, more of this. Image: Getty.

All the signs point to a slow-down in the London property market. Central London house prices dropped by 6.8 per cent between 2015 and 2016, while the numbers of new homes under construction plummeted by 75 per cent. The problem is located almost entirely at the top of the market, with sales transactions collapsing by 86 per cent for properties worth more than £10m.

Central London property values are eye-watering, far beyond the reach of most working London households. A fall in house prices might be welcome as a way to make housing more affordable.

But unfortunately, the perverse incentives at play in the way housing is built mean that a slow-down in the market for luxury flats in Kensington & Chelsea can mean less affordable housing is built, not more – and the consequences may be felt right across the country. There are three main drivers of this:

  • There will be less money for affordable housing where private developers stop building;
  • The way land is traded reduces incentives to build anything other than luxury flats;
  • Developers will build more slowly, reducing supply.

Let’s consider them in turn.

There will be less money for affordable housing where private developers stop building

Grants from central government used to fund almost all the costs of building new affordable housing. This meant that when private development experienced a down-turn, social development could step in to fill some of the gap, keeping builders building and having a stabilising influence on the market as a whole. Such grants funded 75 per cent of affordable housing development costs in the early 1990s – but now fund just 14 per cent.

The majority of finance for new affordable developments now comes in the form of Section 106 agreements: payments or land given by private developers in return for planning permission from the council to build profitable market housing. So the more private development there is in a local area, the more money there should be to subsidise affordable housing for rent or sale.

As affordable housing has become increasingly dependent on Section 106 agreements rather than grant funding, any decline in new construction affects the whole of housing supply, including the bits we care most about – genuinely affordable homes for ordinary families. This means that, unless the slow-down in luxury property development in central London can be balanced out by other kinds of private developer activity, there will be less finance available for affordable housing in the capital.


The way land is traded reduces incentives to build anything other than luxury flats.

That shouldn’t be a problem: there is a huge need for more housing across the country, and especially in London. If luxury flats are getting harder to sell, developers should be able to build and sell something else and still make a profit. Right?

The problem is land. Landowners, advised by their agents, sell their sites for the highest possible price, based on extracting the greatest commercial value from the land. In the case of central London, this often means more luxury flats. Once developers have paid sky-high prices for land on this basis, the only profitable option open to them is to actually build those luxury flats and sell them for the highest possible price.

In this way, the price of land distorts construction away from meeting housing need. Estate agents Savills estimate that 58 per cent of housing need in London is for homes costing less than £450 per square foot – but such homes represent just 25 per cent of new builds planned between now and 2021. On the other hand, 2015-16 saw a significant oversupply of luxury flats as developers tried to recoup the high cost of land, with 1.6 starts for every 1 sale of a home priced above £1000 per square foot.

Developers will build more slowly, reducing supply

But if the bottom has fallen out of the land market surely developers and landlords will readjust? Sadly not. Most landowners are likely to hold on to their assets in anticipation of recovery in the most profitable luxury market, rather than accepting a lower price that would allow different kinds of homes to be built.

In the current market, developers have invested heavily in land for luxury housing. If they build and sell these homes at a lower price, or if they build something else for a lower sale price, they risk not making back the money they spent on that land. Many developers will now instead choose to hold on to the land, restricting supply in an attempt to bolster prices, waiting out the market and building out slowly when prices start to recover. This will put even more pressure on housing supply and on affordability.

So what do we need to do?

We need to create a situation in which developers are incentivised to build affordable homes, not just luxury flats, to meet housing need across the country.

Shelter’s New Civic Housebuilding report sets out a vision for how we can achieve the new homes we need, based on clearer and lower land values. We’re calling on central government to update the rules on land valuation and enable public bodies to use their land holdings to build more affordable homes.

In these ways, we can provide land at prices which enable development to respond to housing need, not just the highest bidder.

Rose Grayston is senior policy officer at Shelter, on whose blog this article originally appeared.

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The smartphone app placing virtual statues of women on the map

A virtual Edith Wharton in Central Park, New York City. Image: The Whole Story Project.

If you’re a woman, then in order for you to be immortalised in stone, bronze or whatever once you’ve shuffled off this mortal coil, you should either have royal blood or be willing to be sculpted naked. That is the rule of thumb.

A statue that actually celebrates a woman’s achievements is a rare sight. Writing in the New Statesman last year, equality campaigner Caroline Criado-Perez found that out of 925 statues in Britain, as listed by the Public Monuments and Sculpture Association, only 158 are of solo women. Of these, 46 are of royalty, including 29 of Queen Victoria. Fourteen depict the Virgin Mary.

There are signs of change, albeit slow. The suffragist Millicent Fawcett is set to be honoured with a statue in Parliament Square, where currently all 11 of the statues are of men. (They include Nelson Mandela and a nine-foot Gandhi.) The monument is to be unveiled next year to celebrate the centenary of British women receiving the right to vote.

Elsewhere, the late comedian Victoria Wood is being honoured with a statue that’ll be erected in Bury, Greater Manchester. In the Moss Side area of the city, a statue of Emmeline Pankhurst will be unveiled in 2019. Unlike the Fawcett one, neither of these is expected to receive public money, relying on crowdfunding and other sources instead.

So how many more statues of women, regardless of how they’re funded, would we need to build in order to reduce the gender gap? Well, according to Jonathan Jones, art critic at the Guardian, the magic number is: zero.

Jones’s argument, back in March, was that building statues doesn’t advance feminism, but simply traps us in the past. He wrote:

Statues don’t hold public memory. They politely bury it. These well-meaning images melt into the background scenery of our lives.

Whether this is empirically true is questionable, but it’s true that we tend not to erect them as often as we used to anyway. This is partly because there is less space available for such monuments – a noticeable disadvantage cities of the present have compared to those of the past. In order to reduce the imbalance, statues of men would probably have to be removed; many would no doubt be okay with that, but it would mean erasing history.

One partial answer to the problem is augmented reality. It can’t close the gender gap, but it could shine a spotlight on it.

To that end, an advertising agency in New York launched an app at the beginning of May. The Whole Story allows users to place virtual statues of women on a map; other uses can then view and find out more about the individuals depicted at their real-world locations, using their smartphone cameras.


Currently, users have to upload their own virtual statues using 3D-modelling software. But going forward, the project aims for an open collaboration between designers, developers and organisations, which it hopes will lead to more people getting involved.

Contributions submitted so far include a few dozen in New York, several in Washington and one of Jane Austen in Hyde Park. There are others in Italy and the Czech Republic.

Okay, it’s an app created by a marketing firm, but there are legitimate arguments for it. First, the agency’s chief creative office has herself said that it’s important to address the gender imbalance in a visual way in order to inspire current and future generations: you can’t be what you can’t see, as the saying going.

Second, if the physical presence of statues really is diminishing and they don’t hold public memory, as Jones argues, then smartphones could bridge the gap. We live our lives through our devices, capturing, snapping and storing moments, only to forget about them but then return to and share them at a later date. These memories may melt away, but they’ll always be there, backed up to the cloud even. If smartphones can be used to capture and share the message that a gender imbalance exists then that’s arguably a positive thing.  

Third, with the success of Pokemon Go, augmented reality has shown that it can encourage us to explore public spaces and heighten our appreciation for architectural landmarks. It can also prove useful as a tool for learning about historical monuments.

Of course no app will replace statues altogether. But at the very least it could highlight the fact that women’s achievements are more than just sitting on a throne or giving birth to the son of God.

Rich McEachran tweets as @richmceachran.

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