Here are five ways governments can intervene in the market to create affordable housing

More than 84 per cent of households in Berlin rent their home. Image: exilism/Flickr, CC BY-NC-ND.

Housing affordability continues to be an issue of importance to voters in many regions. Different countries have adopted different approaches to improve access to affordable housing – with governments playing a central role in ensuring people are adequately sheltered, as well as being encouraged to buy housing where possible. In many countries there is an underlying desire by households to own their own home; in others, renting is the norm.

In each case there are specific approaches, sometimes unique-to-that-country, that have helped address the issue of affordability. Here are five.

1. Government intervenes in the rental market

In some countries there is a general culture of renting for accessing accommodation, rather than assuming all households should achieve home ownership. At times, renting is cheaper than buying.

In Germany most households (54.1 per cent) are renters due to the long-term intervention in the marketplace by the government, as well as the accepted culture that renting is suitable over the long-term. In Berlin a total of 84.4 per cent of all households rent. Providing this amount of rental accommodation is a major challenge without substantial government intervention or provision of housing.

 

Source: Federal Statistics Office Germany, 2011.

 

For example, in 2012 the German government paid housing allowance to approximately 783,000 households, equating to 1.9 per cent of all private households. Most of this funding (57 per cent) was allocated to single person households, who are unable to compete in the open housing market with multiple income households.

Source: Federal Statistics Office Germany, 2011.

Other countries have also acknowledged the gap between

(a) the maximum amount of rent a tenant can pay, and

(b) the minimum level of rent a landlord will charge.

In the US, for example, this gap is bridged by the widespread use of a voucher system ,which subsidies the payment of rent to private landlords. This system is funded by the US government, and ensures tenants can access a minimum quality of affordable housing.

2. Government provides affordable housing

In Singapore there is a high level of government intervention in the market, with the Housing and Development Board (HDB) providing approximately 80 per cent of all housing in the country. Approximately 90 per cent of households in Singapore own their own home; there are also grants for first time buyers and second time buyers in Singapore.

In Hong Kong, about 29.7 per cent of residents live in public rental housing (PRH) provided by the government. In Scotland, a large proportion of the supply of affordable housing is undertaken by housing associations and local authorities. This collectively equates to about quarter of total housing accommodation in the market. 

Source: Housing Statistics for Scotland, 2011.

However – the recent trend for many countries, including Australia, has been the provision of less direct housing by governments.

3. Cities embrace higher density housing

There are numerous examples of global cities making better use of limited inner-city land supply by encouraging higher density living in high rise units or condominiums, especially in Asian cities including Hong Kong, Macau and Singapore. The provision of affordable housing for purchase or renting is therefore more likely to be achieved in these circumstances, due to minimal land use and higher densities.

However, high-rise living is not commonly accepted in many European cities, or in locations with a resistance due to cultural preferences for detached housing.

4. Public transport allows residents to commute to less expensive housing

The main driver of where a household lives is the need to be close to their workplace. As more affordable housing is usually located away from the central business district, the trade-off is cheaper homes but additional commuting time.

When this extended commuting time – of up to 2 hours each way – is combined with improved transport infrastructure such as in Japan, it is possible to access affordable housing in outlying satellite towns and cities where land is more affordable. In other words, governments which improve road and public transport infrastructure can also increase access to affordable housing.

Source: Japan Guide, 2000.

 

5. Multiple person households are encouraged

Lower demand can be achieved by limiting population levels and underlying demand for housing. But while this may not be an option for many governments, another option is to encourage multiple person households which otherwise would remain as single person households.

According to the Australian Bureau of Statistics (2012), in 1911 the average persons per household was 4.5. By 1991, that had decreased to 2.7.

Source: Wikipedia, compiled from various sources.

The Conversation

Richard Reed is chair in property & real estate at Deakin University, Melbourne.

This article was originally published on The Conversation. Read the original article.

 
 
 
 

The tube that’s not a tube: What exactly is the Northern City line?

State of the art: a train on the Northern City Line platforms at Moorgate. Image: Haydon Etherington

You may never have used it. You may not even know that it’s there. But in zones one and two of the London Underground network, you’ll find an oft-forgotten piece of London’s transport history.

The Northern City line is a six-stop underground route from Moorgate to Finsbury Park. (It’s officially, if confusingly, known as the Moorgate line.) But, unlike other underground lines, it not part of Transport for London’s empire, and is not displayed on a normal tube map. Two of the stations, Essex Road and Drayton Park, aren’t even on the underground network at all.

The line has changed hands countless times since its creation a century ago. It now finds itself hiding in plain sight – an underground line, not part of the Underground. So why exactly is the Northern City line not part of the tube?

The Northern City line, pictured in dotted beige. Source: TfL.

As with many so many such idiosyncrasies, the explanation lies in over a century’s worth of cancellations and schemes gone awry. The story starts in 1904, when the private Great Northern Railways, which built much of what is now the East Coast Main Line, built the line to provide trains coming from the north of London with a terminus in the City. This is why the Northern City line, unlike a normal tube line, has tunnels wide enough to be used by allow mainline trains.

Eventually, though, Great Northern decided that this wasn’t such a bright idea after all. It mothballed plans to connect the Northern City up to the mainline, leaving it to terminate below Finsbury Park, scrapped electrification and sold the line off to Metropolitan Railways – owners of, you guessed it, the Metropolitan line.

Metropolitan Railways had big plans for the Northern City line too: the company wanted to connect it to both Waterloo & City and Circle lines. None of the variants on this plan ever happened. See a theme?

The next proposed extensions, planned in the 1930s once London Underground had become the domain of the (public sector) London Passenger Transport Board, was the Northern Heights programme. This would have seen the line would connected up with branch lines across north London, with service extended to High Barnet, Edgware and Alexandra Palace: essentially, as part of the Northern line. The plans, for the main part, were cancelled in the advent of the Second World War.

The Northern Heights plan. The solid green lines happened, the dotted ones did not. Image: Rob Brewer/Wikimedia Commons.

What the war started, the Victoria line soon finished. The London Plan Working Party Report of 1949 proposed a number of new lines and extensions: these included extension of the Northern City Line to Woolwich (Route J) and Crystal Palace (Route K). The only one of the various schemes to happen was Route C, better known today as the Victoria line, which was agreed in the 1950s and opened in the 1960s. The new construction project cannibalised the Northern City Line’s platforms at Finsbury Park, and from 1964 services from Moorgate terminated one stop south at Drayton Park.

In 1970, the line was briefly renamed the Northern Line (Highbury Branch), but barely a year later plans were made to transfer it to British Rail, allowing it to finally fulfil its original purpose.


Before that could happen, though, the line became the site of a rather more harrowing event. In 1975, the deadliest accident in London Underground history took place at Moorgate: a southbound train failed to stop, instead ploughing into the end of the tunnel. The crash killed 43 people. The authorities responded with a major rehaul of safety procedure; Moorgate station itself now has unique timed stopping mechanisms.

The last tube services served the Northern City Line in October 1975. The following year, it reopened as part of British Rail, receiving trains from a variety of points north of London. Following privatisation, it’s today run by Govia Thameslink as part of the Great Northern route, served mainly by suburban trains from Hertford and Welwyn Garden City.

Nowadays, despite a central location and a tube-like stopping pattern, the line is only really used for longer-scale commutes: very few people use it like a tube.

Only 811,000 and 792,000 people each year enter and exit Essex Road and Drayton Park stations respectively. These stations would be considered the fifth and sixth least used in the tube network – only just beating Chorleywood in Hertfordshire. In other words, these usage stats look like those for a station in zone seven, not one in Islington.

One reason for this might be a lack of awareness that the line exists at all. The absence from the tube map means very few people in London will have heard of it, let alone ever used it.

Another explanation is rather simpler: the quality of service. Despite being part and parcel of the Oyster system, it couldn’t be more different from a regular tube. The last (and only) time I used the line, it ran incredibly slowly, whilst the interior looked much more like a far-flung cross-country train than it does a modern underground carriage.

Waiting for Govia. Image: Haydon Etherington.

But by far the biggest difference from TfL is frequency. The operators agreed that trains would run between four and six times an hour, which in itself is fine. However, this is Govia Thameslink, and in my experience, the line was plagued by cancellations and delays, running only once in the hour I was there.

To resolve this, TfL has mooted taking the line over itself. In 2016, draft proposals were put forward by Patrick McLoughlin, then the transport secretary, and then mayor Boris Johnson, to bring "northern services... currently operating as part of the Thameslink, Southern and Great Northern franchise" into TfL's control by 2021.

But, in a story that should by now be familiar, Chris Grayling scrapped them. At least it’s in keeping with history.