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.

 
 
 
 

Here are my five favourite London council estates

The Dunboyne Road estate. Image: Steve Cadman/Wikimedia Commons.

The author is a Labour member of the London Assembly. In the name of impartiality, CityMetric would like to extend the invitation to write similar columns to representatives of other political parties.

From successful post-war efforts to move families out of slums and into modern homes, to today’s efforts to construct a new generation of social housing, there’s much to be celebrated in London’s precious council housing stock.

This year we celebrate the centenary of the Addison Act, which established a national building programme with government funding for the first time. So here – in no particular order – are my top five London estates:

1. Dunboyne Road

In 1965, the newly established London Borough of Camden was bold and radical when it came to public housing. Their architect’s department boasted 98 staff, led by Sydney Cook. The Grade II listed Dunboyne Road (pictured above) was Britain’s first high-density, low-rise estate. Designed in the late 1960s and completed in 1977, it was the first major work by architect Neave Brown.

Its concrete construction and geometric layout are eye-catchingly modernist, but the 71 flats and maisonettes fit neatly into their surroundings; a reimagining of the classic London street for the 1960s. Each has a private terrace and own entrance onto the central pedestrian walkway and communal gardens, with stepped levels and dual-aspect windows creating light throughout.

Neave Brown himself lived on the estate in the final years of his life remarking, “Who am I to say, but it’s beautiful”.

2. Lilington Gardens

Located just off Vauxhall Bridge Road, the fourteen blocks at Lilington Gardens were built between 1964 and 1972. Between three and eight storeys each, it was again a rejection of the tower blocks which dominated the era, showing that mid-rise housing could provide both beauty and density.

Image: Ewan Munro/Wikimedia Commons.

At a time when Westminster could be proud of the quality of its housing, John Darbourne and Geoffrey Darke won a competition to design the new estate. The result was something special, eschewing modernist forms for something more rugged and layered. The layout allows for secluded green spaces, while the red brick cladding echoes the neighbouring Victorian church of St James the Less. Like all good estates, it included a pub – the Grade II*-listed Pimlico Tram (now The Cask). It was included not as an afterthought, but an integral part of the estate’s design.

3. Ossulston Estate

By the early 1950s, the London County Council’s architect’s department was the biggest in the world, building housing on a huge scale in addition to showp iece projects such as the Southbank Centre.

Though their suburban estates – Downham in Bromley, and Becontree in Barking and Dagenham – were pioneering examples of low-rise of modernity in metroland, these efforts did not always suit the needs of poor city dwellers who weren’t able to move further out. The Ossulton Estate, however, built between 1927 and 1931 on the site of a Somerstown slum and located between Euston and St Pancras stations, did exactly that.

Image: Stephen McKay/Wikimedia Commons.

Chief architect George Topham Forrest’s work was inspired by visits to ‘Red’ Vienna and Ossulston bears distinct similarities to Karl Marx-Hof, which was constructed at the same time. While the roofs and windows have traditional elements, the overall aesthetic is a modernist classic. Like many estates in post-war years, it suffered from neglect and a lack of investment, but following a £6m improvement programme by Camden Council in 2004, the Ossulston is now back to its brilliant best.

4. Alton Estate

Roehampton’s Alton Estate, completed in 1959, was designed by a team led by Rosemary Stjernstedt – the first woman to serve as a senior public sector architect in Britain.

The two parts of the estate – East and West – are the crown jewels of British post-war council housing. Alton West was Le Corbusier in Albion: six ultra-modernist blocks modelled on the Unité d’habitation in Marseille, set among the landscape inherited from the Georgian Mount Clare house. Alton East was a softer, Scandinavian-inspired design of the “new Brutalists” in the LCC.

Image: Stevekeiretsu/Wikimedia Commons.

Rising above the trees to the north east of Richmond Park, the Alton Estate stands testament to the visionary idealism of post-war council housebuilding. On its completion, visitors flocked from across the globe, with American critic G.E. Kidder Smith calling it “probably the finest low-cost housing development in the world”.

Sadly, Alton West however is now at risk from ‘regeneration’ proposals which would see 288 existing homes lost. While council estates should not be fetishised, with investment, improvement and expansion encouraged, any change must be done sensitively and with residents’ backing. I hope that Wandsworth Council and Redrow will follow the mayor’s Good Practice for Estate Regeneration and hold a ballot before plans go ahead, and that if they do, they build on Rosemary Stjernstedt’s legacy.

5. King’s Crescent

When it comes to regeneration Hackney Council have taken an altogether different approach to Wandsworth.

Located on Green Lanes opposite the magnificent Clissold Park, King’s Crescent’s route to a successful and well-supported regeneration project hasn’t always been an easy one. The early 1970s estate was blighted by poor construction, navigability issues and an ill-fated partial demolition in 2000 which turned much of the landscape into hoardings and rubble. But thanks to a step-change in resident engagement and a transformation programme funded by Hackney Council, by 2023 it will be host to 765 new and refurbished homes.

Image: David Holt/Wikimedia Commons.

In the era of government-imposed cuts to local authority budgets, councils have to be pragmatic about funding choices and the new King’s Crescent does include homes for private sale. This is understandably a source of some consternation, but it’s also the source of funding which has made the regeneration possible. Hackney has ensured that more than 50 per cent of the new homes are genuinely affordable, with 97 brand new council homes for social rent.

The new developments have greatly enhanced the area, using both new build and renovation to stitch the estate better into its Victorian surroundings. Existing homes have been retrofitted with balconies, while disused garage space has been repurposed for modern flats. Hackney have clearly thought carefully about character and open spaces, as well as ceiling heights, windows and internal storage.

It is an exceptional project – one of a growing number of new schemes now being spearheaded by ambitious councils across the capital. In 2018-19, the Mayor of London funded the start of 1,916 new council homes – the highest figure since 1984-85.


…what about the Barbican?

On the fiftieth anniversary of its opening, it would be remiss not the mention the Barbican. It’s a brutalist masterpiece and a fantastic feat of post-war planning and design. The location and design are clearly outstanding, but it’s the bright and modern interiors which are truly to die for.

So why is it not on the list? Although it was built by the City of London Corporation, not one of the flats was ever available at a social rent. The properties were built to let at market rents to workers in the City, who later found themselves in the fortunate position of being able to snap them up under the Right to Buy – still the fate of far too many of London’s vital social homes.

Tom Copley is a Labour member of the London Assembly.