Yes, Britain does have a bloody housing shortage – and we obviously do need to build more homes

Not enough. Image: Getty.

Why are cartels and monopolies bad? The obvious answer is that they generally take from the poor and give to the rich. That is one good reason.

But economists and competition lawyers learn a second reason. Even if you taxed the cartel profits from the rich and gave them back to the poor, people would overall be worse off than with no cartel.

Cartels and monopolies cause what economists call a “deadweight loss” – they mean that less wealth gets created. Society as a whole is poorer because of them.

The owner of the only bridge across a river will probably raise the toll to make as much money as they can. A carpenter might then decline a small job on the other side. A teacher might decide the pay for an extra hour of maths tuition is not worth the toll fee. Less gets made and done, and society as a whole is worse off, as for centuries when the City of London had a monopoly on bridges.

That is what has happened with housing today. An effective cartel caused by our national failure to ensure plentiful housing as the 1947 planning regime originally intended has led to a massive shortage of housing within reach of the best job opportunities. 

That is still being denied by Ian Mulheirn, most recently in a paper published by CaCHE. Mulheirn works for Tony Blair, who as prime minister oversaw a tripling of house prices. And he claims that Britain actually has surplus housing stock, as housing completions have outstripped household formation, which of course neglects that prices affect how many households there are.

And most of Mulheirn’s alleged “surplus” of homes is far from good job opportunities. As Paul Cheshire points out, twice as many houses were built in Doncaster and Barnsley in the five years to 2013 as in Oxford and Cambridge. National averages tell you nothing about the specifics. On average every human has roughly one ovary and one testicle.

The main reason that we have regional wage differences – and low wages – is that the housing shortage in some places makes it much harder nowadays for people to move around, as the Resolution Foundation has shown. With plentiful homes near good jobs, the wage disparities across the country would shrink because people in places with low-paid jobs would move to places with better pay, as they did for centuries. 

Blocking homes near jobs doesn’t rebalance the country. In a world of network effects and “agglomeration economics”, sadly it does completely the opposite.


Had Mulheirn’s arguments won back then, the Industrial Revolution would never have happened, because he would have been agitating against housing and factories near the mines and other needed inputs.

How bad is the shortage of homes? The total of house prices in the UK exceeds the cost to build those homes today by about three times.

For any normal economist, that is the end of the matter. In any well-functioning market for anything, that does not happen. It does not happen in Atlanta, or Houston. The difference is also far smaller in Tokyo, partly because they build more homes per capita.

Low interest rates have not caused high house prices in Atlanta or Houston, which build abundant housing; nor in Blackpool, because there are already plenty of homes for the people who wish to live there. The long-run relationship between house prices and interest rates flagged by Mulheirn only happens when the supply of housing is needlessly restricted. Interest rates do affect house prices in the UK, because that supply is constrained.

When spatial economists like Professors Paul Cheshire, Christian Hilber or Edward Glaeser talk about a shortage, they are talking about that. Homes cost more than they need to. That's what any economist means by a shortage. No regular economist goes around just counting things. They look at costs and prices.

Mulheirn has proven strangely reluctant to engage with this point, probably because it is fatal to his case.

Solving the politics of where to build homes is hard, of course, especially in the South East. That’s the main reason why we don’t build anywhere near enough. But there is endless room to build more homes, even within existing cities, in popular ways while improving amenity and helping the environment.

Mulheirn’s supposedly killer point is that building 300,000 homes a year would not eliminate the gulf that the failure to build has created between build costs and house prices. But no-one, except Mulheirn’s straw man, is arguing that. In fact from his research you should conclude that we need to be building far more than that. Even back in the 1840s or the 1930s, for example, we managed to grow the national housing stock much faster than today. 

Mr Mulheirn conveniently forgets those decades, and insights from political science and other fields about how to solve the politics of our housing crisis, when blithely asserting that building more homes ‘probably’ wouldn’t help much.

Every home that gets built, especially if it is near good job opportunities, helps to reduce the shortage, compared to not building it. The Redfern Review for which Mulheirn wrote the economic evidence estimated that a 1 per cent increase in the housing stock means a 1.7 per cent decrease in rents and a 1.8 per cent decrease in house prices, holding other factors constant. If we built more homes, they would be cheaper. Most of the rest of his argument is just sophistry.

It is a pity that his opinion piece – not endorsed by the publisher, CaCHE – was not subject to normal double-blind peer review, but then it would probably never have seen the light of day. (EDITOR'S NOTE: Mulheirn has since been in touch to point out that, as a CaCHE publication, his report was subject to the Centre’s normal process of academic  peer review.) The two peer critiques by economists published alongside it strongly disagree with his arguments. They, and the endless other papers debunking Mulheirn’s claims, should get more attention.

John Myers is co-founder of YIMBY Alliance and London YIMBY, which campaigns to end the housing crisis with the support of local people.

 
 
 
 

In South Africa's cities, evictions are happening despite a national ban

An aerial view shows a destroyed house in Lawley, south of Johannesburg, on April 20, 2020. The city has been demolishing informal structures on vacant land despite a moratorium on evictions. (Marco Longari/AFP via Getty Images)

On the morning of 15 July, a South African High Court judge ruled that the city of Cape Town’s Anti-Land Invasion Unit had illegally evicted a man when it destroyed the shack where he was living.

That afternoon, the Anti-Land Invasion Unit was out again, removing shacks in another informal settlement.

Evictions were banned in South Africa for nine weeks, after the national government placed the country under a strict Covid-19 lockdown in late March. At present, eviction orders are automatically suspended until the country moves to a lower “alert level” and can only be carried out with a special order from a judge.

Yet major cities including Cape Town, Johannesburg and eThekwini (created through the merger of Durban with several surrounding communities), have continued to use municipal law enforcement agencies and private security companies to remove people from informal housing. In many cases those operations have been conducted without a court order – something required under regular South African law.

Around 900 people were evicted from three informal settlements in eThekwini during the eviction ban, according to the Church Land Programme, a local NGO. Its director, Graham Philpott, says it’s also aware of evictions in other informal settlements.

While evictions aren’t a “new experience” in these communities, the NGO released a report on lockdown evictions because they were “so explicitly illegal”. “There was a moratorium in place,” Philpott says, “and the local municipality acted quite flagrantly against it. There’s no confusion, there’s no doubt whatsoever, it is illegal. But it is part of a trend where the eThekwini municipality has acted illegally in evicting the poor from informal settlements.”

Evictions also took place in Cape Town and Johannesburg during so-called “hard lockdown” according to local activists. In eThekwini and other municipalities, the evictions have continued despite restrictions. In Cape Town, authorities pulled a naked man, Bulelani Qholani, from his shack. That incident, which was captured on video, drew condemnation from the national government and four members of the Anti-Land Invasion unit were suspended. 


The cities say they’re fighting “land invasions” – illegal occupations without permission from the land owner.

“Land invasions derail housing and service projects, lead to the pollution of waterways, severely prejudice deserving housing beneficiaries and cause property owners to lose their investments over night,” Cape Town’s executive mayor, Dan Plato said in a statement. (Plato has also claimed that Qholani did not live in the shack he was pulled from and that he disrobed when municipal authorities arrived.)

South African municipalities often claim that the shacks they destroy are unoccupied. 

If they were occupied, says Msawakhe Mayisela, a spokesman for the eThekwini municipality, the city would get a court order before conducting an eviction. “Everything we’re doing is within the ambit of the law,” Mayisela says. But “rogue elements” are taking advantage of Covid-19, he added.

“We fully understand that people are desperately in need of land, but the number of people that are flocking to the cities is too much, the city won’t be able to provide housing or accommodation for everyone overnight,” he says. 

While eThekwini claims to be a caring city, local activists say the evictions show otherwise.

In one case, 29 women were evicted from shacks during the hard lockdown. With nowhere to go, they slept in an open field and were arrested by the South African Police Service for violating the lockdown, Philpott says.

“These evictions are dehumanizing people whose dignity is already compromised in many ways,” says S’bu Zikode, the president of Abahlali baseMjondolo, a community organization whose Zulu name translates to “the people of the shacks”. 

“It has reminded us that we are the people that do not count in our society.”

Municipal law enforcement and private security contractors hired by cities regularly fire rubber bullets, or even live ammunition, at residents during evictions. Some 18 Abahlali baseMjondolo activists have been killed since the organization was founded in 2005, Zikode says, most by the eThekwini Land Invasion Unit and Metro Police.

(Mayisela says that if city employees have broken the law, Abahlali baseMjondolo can file a complaint with the police. “There is no conclusive evidence to the effect that our members have killed them,”  he says.)

Other Abahlali baseMjondolo activists have been killed by what Zikode calls “izinkabi,” hitmen hired by politicians. Two eThekwini city councillors were sentenced to life in prison 2016 after they organized the killing of Thuli Ndlovu, an Abahlali baseMjondolo organizer. A member of the Land Invasion Unit who is currently facing a charge of attempted murder after severely injuring a person during an eviction remains on the job, Zikode says.

South Africa’s 1996 constitution is intended to protect the public from arbitrary state violence and guarantees a right to housing, as well as due process in evictions. But for Zikode, the South African constitution is a “beautiful document on a shelf”.

“For the working class and the poor, it’s still difficult to have access to court. You’ve got to have money to get to court,” he says. 

The actions by municipal law enforcement are breaking down social trust, says Buhle Booi, a member of the Khayelitsha Community Action Network, a community group in the largest township in Cape Town.

“There’s a lack of police resources and those very few police resources that they have, they use to destroy people’s homes, to destroy people’s peace, rather than fighting crime, real criminal elements that we see in our society,” Booi says.

For him, it’s a continuation of the practices of the colonial and apartheid governments, pushing poor people, most of whom are Black, to the periphery of cities.

Around one-fifth of South Africa’s urban population live in shacks or informal dwellings, according to a 2018 report by SERI. Many more live in substandard housing. City governments maintain that the shacks destroyed during anti-land invasion operations are unfinished and unoccupied. But Edward Molopi, a research and advocacy officer at SERI, says that this claim is an attempt to escape their legal obligations to get a court order and to find alternative accommodation for affected people. 

The roots of the current eviction crisis go back to apartheid, which barred non-white people from living in cities. Between the 1940s and 1970s, tens of thousands of people were forcibly relocated from neighbourhoods like Johannesburg’s Sophiatown and Cape Town’s District Six to remote townships.

In the 26 years following the end of apartheid, deepening economic inequality and rampant unemployment have limited access to formal housing for millions of South Africans. Government housing programs have mostly focused on building small stand-alone homes, often on the peripheries of cities far from jobs and amenities.

While these well-intentioned projects have built millions of homes, they’ve failed to keep up with demand, says Marie Huchzermeyer, a professor at the Centre for Urbanism & Built Environment Studies at the University of the Witwatersrand in Johannesburg. Government-funded housing projects “will never on it’s own be enough,” she says. “It has to be accompanied by land release.”

Government policies call for the “upgrading” of informal settlements and the formalization of residents’ occupation. But “there are still very, very, very few projects” of that nature in South Africa, Huchzermeyer says. “Even if it’s an informal settlement that’s been around for 20 years, there still seems to be a political wish to punish people for having done that.” The government wants people to go through the formal process of being given a house, she says – and for them to be thankful to the government for providing it.

At the municipal level, change will require “real leadership around informal settlement upgrading and around ensuring that land is available for people to occupy,” she says. 

Despite the end of enforced racial segregation, spacial apartheid remains a factor in South Africa. There are few mixed-income neighbourhoods. Those who can afford to often live behind walls in sprawling low-density suburbs, while the poor live in overcrowded slums and apartment buildings.

The creation of the apartheid city “didn't happen by chance,” says Amira Osman, a professor of architecture at the Tshwane University of Technology. “It was a deliberate, structured approach to the design of the city. We need a deliberate, structured approach that will undo that.”

Since last fall, Johannesburg’s Inclusionary Housing Policy has required developments of 20 or more units to set aside 30% of those units for low-income housing.

The policy, which faced significant opposition from private developers, won’t lead to dramatic change, says Sarah Charlton, a professor at the Centre for Urbanism and Built Environment Studies, but it is “an important and significant step.”

Zikode isn’t optimistic that change will come for shack dwellers, however.

“People in the high positions of authority pretend that everything is normal,” he says. “They pretend that everyone is treated justly, they pretend that everyone has homes with running water, that everyone has a piece of land – and hide the truth and the lies of our democracy.”

Jacob Serebrin is a freelance journalist currently based in Johannesburg. Follow him on Twitter.