How can compact cities keep house prices under control?

Southwark (left): surprisingly un-dense. Image: Getty.

Islington is the most densely populated are in the United Kingdom – yet wandering around the quiet streets of the north London borough, it is difficult to appreciate just how many people live there. Handsome terraces, elegant squares and a plethora of parks disguise the fact that there are nearly 14,000 people per km2.

By comparison, anyone passing through Southwark, on the other side of the Thames, is immediately aware of the crowds of people who live and work in the area. New glass towers loom over the major roads, while older council housing squat heavily on the back streets. Cars crawl through the famously congested roundabout and the air is heavy with pollution.

Yet Southwark has fewer than 10,000 residents per km2. This means it is significantly less dense than many of its more desirable northern neighbours: Kensington and Chelsea, Hackney, Camden, Tower Hamlets and, of course, Islington.

Measuring the benefits of urban density

Increasing the number of people living and working in an area can generate huge benefits for a city. Productivity rises as people spend less time and money travelling, and can share knowledge and ideas more freely. Businesses can reduce their production costs when they have access to a greater choice of specialised suppliers and workers. And it’s cheaper to provide services such as health care, waste collection and buses when more people can use them.

For the first time, researchers have estimated the monetary value of these benefits to urban residents. Their findings have just been published in the first working paper from the Coalition for Urban Transitions, a network of over twenty organisations committed to enhancing the economic, social and environmental performance of cities.

Drawing on more than 300 academic papers, Demystifying Compact Urban Growth: Evidence from 300 Studies Across the World demonstrates that increasing population density generates significant economic returns. The authors find that a 10 per cent increase in the number of people living and working in an area enhances productivity by approximately £54 per person per year. Better access to jobs is worth another £48, while improved access to services and amenities is valued at £38. Increased population density is also associated with better environmental outcomes, including preservation of green space and greater energy efficiency.

All other things being equal, this suggests that compact cities like Hong Kong, New York and Paris are likely to be richer and more sustainable than sprawling cities such as Houston or Melbourne.

Managing the risks of urban density

A more compact city is not a silver bullet: there are also risks associated with increasing population density. Careful urban planning is required to mitigate these risks, and deliver the potential economic and environmental benefits.

First, a 10 per cent increase in the number of people living and working in an area can lead to more congestion, with an estimated cost of £27 per person a year. Significant investment in public transport, cycling lanes and pedestrian walkways is essential to ensure that people can move around the city without cars.

Second, this increase in density increases housing costs by £186 per person per year. Such growth in house prices might benefit people who own their own homes or rent out property – but it will be a challenge for renters. As low-income households are more likely to rent, there is a risk that compact city policies will exacerbate inequality within cities.

Governments can avoid an increase in housing costs through policies to increase housing supply. A steady flow of new homes coming on to the market can have a downward effect on housing prices, which may outweigh the upward effect caused by increasing population density.


Lessons from London

In the 19th century, the city of London undertook a series of extraordinarily ambitious urban infrastructure projects that continue to shape the city. The world’s first underground railway was opened in 1863; today, the London Underground carries an average five million passengers per day.

In the 1860s, a vast network of sewers and drains were constructed to serve the three million people living in London. These pipes ended the waves of dysentery, typhoid and cholera that devastated the city, and continue to be used by over 8m Londoners. These far-sighted investments enabled people to live and work in close proximity to each other, helping to sustain London’s population and economic growth for over a century.

A walk through London today suggests that the city is now struggling to manage population density. Despite Crossrail, the proliferation of cycling lanes and iconic red buses on every street, many people continue to depend on cars. As a result, London has the worst air pollution in Western Europe. A normal day’s exposure is equivalent to smoking 15 cigarettes.

The problems extend from transport to housing. House prices in Islington have doubled in the last decade, a period when real wages have stagnated. The soaring property prices are the favourite topic of struggling renters or prospective buyers. The city needs to build over 50,000 homes a year to keep up with population growth, while redressing decades of neglect in the existing housing stock.  The failures of London’s housing policy were made all too clear with shocking fire that devastated Grenfell Tower and the lives of its residents.

Thousands of people move to London every year for the economic and social opportunities associated with this extraordinary city. Its dynamism is due in no small part to its high population density. However, the city’s strained transport system and spiralling house prices underscore the importance of strategic government intervention to manage the risks of crowding so many people into such a small area. Large-scale investment in public transport and housing are essential to ensure that compact cities are also liveable and affordable.

Sarah Colenbrander is a researcher with the International Institute for Environment and Development (IIED) and senior economist with the Coalition for Urban Transitions. The working paper, Demystifying Compact Urban Growth: Evidence from 300 Studies Across the World, was prepared for the Coalition for Urban Transitions by the Organisation for Economic Cooperation and Development (OECD).

 
 
 
 

Could twin towns bring Britain back together?

An unlikely pair. Image: Wikimedia Commons.

Twin towns: an irrelevant novelty to most of us, a peculiar name on a village’s welcome sign. But could linking one British town to another – a domestic reinterpretation of this long-standing European practice – help bring Britain back together in a time of national crisis?

Born in the aftermath of World War II, town twinning aimed to foster cooperation and solidarity across Europe. Communities entered formal alliances, nurturing friendships and shared histories. Coventry forged links with Dresden and Volgograd, then Stalingrad, marking the devastation faced by their citizens during the war.

The democratisation of Greece, Spain and Portugal during the 1970s led to a new wave of twin towns across Europe, as did the fall of the Soviet Union a decade later. Since its inception, the focus of town twinning has been on uniting people through relationships. It is a testament to the initiative’s success that many of these remain to this day; Coventry recently enjoyed a performance at the city’s cathedral by Volgograd’s children’s choir.

While European relations have improved since the 1940s, unity at home has received less attention. As a result, Britain is riven with deep economic, political, educational and cultural divides. These fault lines are increasingly determined by geography, with a growing gap between our big metropolitan cities and almost everywhere else.

In comparison to other European countries, we face staggering levels of regional inequality; six of the ten poorest regions in northern Europe can been found in the UK. As outlined by Alan Milburn, the government’s former social mobility tsar, “the country seems to be in the grip of a self-reinforcing spiral of ever-growing division. That takes a spatial form, not just a social one.”

These divisions are poisoning our body politic. As Adam Smith argued in The Theory of Moral Sentiments, putting yourself in someone else's shoes is vital for developing a moral compass; in doing so "we conceive ourselves enduring all the same torments, we enter as it were into his body, and become in some measure the same person with him..." But this is difficult when we have little interaction or experience of those with opposing views.

This is increasingly likely in geographically polarised Britain, with the places we live dominated by people who think alike. Our political leaders must commit time and energy to bridging these divides, just as the leaders of Europe did in the aftermath of the Second World War. By forging links between different parts of the country, a new era of domestic town twinning would do just that.


School exchanges between sister towns would offer an opportunity for children to be exposed to places, people and perspectives very different to their own. This would allow future generations to see things from an alternative and opposing perspective. It may also embed from a young age an awareness of the diversity of experiences seen by people across our highly unequal country.

MPs would be encouraged to spend time in their constituency’s sister town. First-hand exposure to voters in a very different part of the country would surely soften the views of even the most entrenched parliamentarian, making for a more civil debate in the Commons. Imagine the good this would do for Parliament today, with Brexit gridlocked because of the unwillingness of MPs to compromise.

In 2016 the Carnegie UK Trust launched its Twin Towns UK programme, a pilot linking twenty towns across the UK to examine how they might develop together. Emerging benefits include a reduction of insularity and a greater awareness of the bigger picture. Its focus was not on bridging economic divides – towns with similar socioeconomic characteristics were twinned – but initial outcomes from the scheme suggest a broader programme of domestic town twinning could have a powerful impact.

Looking further back, Camden has been twinned with Doncaster since the 1980s, a relationship that unionised Camden Town Hall workers forged in a display of solidarity with striking miners during the 1980s. Funds were raised to feed families of striking workers at the pit and Camden locals even drove north to deliver presents at Christmas. Though the relationship appears less active today, it serves as a powerful reminder of twinning’s capacity to bring people from very different places together.

As we prepare for Brexit it’s imperative that we protect existing twin town relationships with our European partners. This is of vital importance when we know sadly many of these are under threat from austerity and gloriously un-PC mayors. But we should look to breathe new life into these traditions too, where possible. Domestic town twinning would do just that: a step towards bringing Britain back together, just as a continent was reunited after the devastation of war.

Ben Glover is a researcher at the think tank Demos.