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).

 
 
 
 

Community-powered policies should be at the top of Westminster’s to do list

A generic election picture. Image: Getty.

Over the past five decades, political and economic power has become increasingly concentrated in the UK’s capital. Communities feel ignored or alienated by a politics that feels distant and unrepresentative of their daily experiences.

Since the EU referendum result it has become something of a cliché to talk about how to respond to the sense of powerlessness felt by too many people. The foundations of our economy have been shifted by Brexit, technology and deindustrialisation – and these have shone a light on a growing divergence in views and values across geographies and generations. They are both a symptom and cause of the breakdown of the ties that traditionally brought people together.

As the country goes through seismic changes in its outlook, politics and economy, it is clear that a new way of doing politics is needed. Empowering people to take control over the things that affect their daily lives cannot be done from the top down.

Last week, the Co-operative Party launched our policy platform for the General Election – the ideas and priorities we hope to see at the top of the next Parliament’s to do list. We have been the voice for co-operative values and principles in the places where decisions are made and laws are made. As co-operators, we believe that the principles that lie behind successful co‑operatives – democratic control by customers and workers, and a fair share of the wealth we create together – ought to extend to the wider economy and our society. As Labour’s sister party, we campaign for a government that puts these shared values into practice.

Our policy platform has community power at its heart, because the co-operative movement, founded on shop floors and factory production lines, knows that power should flow from the bottom up. Today, this principle holds strong – decisions are best made by the people impacted the most by them, and services work best when the service users have a voice. Our policy platform is clear: this means shifting power from Whitehall to local government, but it also means looking beyond the town hall. Co-operative approaches are about placing power directly in the hands of people and communities.


There are many great examples of Co-operative councillors and local communities taking the lead on this. Co-operative councils like Oldham and Plymouth have pioneered new working relationships with residents, underpinned by a genuine commitment to working with communities rather than merely doing things to them.

Building a fairer future is, by definition, a bottom-up endeavour. Oldham, Plymouth and examples like the Elephant Project in Greater Manchester, where people with experience of disadvantage are involved in decision-making, or buses in Witney run by Co-operative councillors and the local community – are the building blocks of creating a better politics and a fairer economy.

This thread runs through our work over the last few years on community wealth building too – keeping wealth circulating in local economies through growing the local co-operative sector. Worker-owned businesses thriving at the expense of global corporate giants and private outsourcers. Assets owned by communities – from pubs to post offices to rooftop solar panels.

And it runs through our work in Westminster too – with Co-operative MPs and peers calling for parents, not private business, to own and run nurseries; for the stewards of our countryside to be farmers rather than big landowners; and for workers to have a stake in their workplaces and a share of the profit.

Far from being ignored, as suggested in last week’s article on community power, our work has never been more relevant and our co-operative voice is louder than ever.

Anna Birley is policy offer at the Co-operative party.