Yes, Britain does have a housing crisis – and building more will fix it

Could put more houses there, lads. Image: Getty.

Most people accept that Britain is in the middle of a housing crisis. Measured by the diminutive size of our homes or the inflated size of our rents relative to other countries, it’s clear that we’re doing something seriously wrong. Most spectacularly, although less robustly, the ratio of house prices to incomes has reached an incredible 14.2 in London, according to Hometrack.

Meanwhile, a small group take the contrarian view that, actually, there is no housing crisis and, if there is, building more homes won’t solve it. The most notable is Ian Mulheirn of Capital Economics, who recently explained his thoughts in a CapX blog.

He makes two good points and one that’s worthwhile, but ultimately irrelevant. The two good points are, firstly, that there is no UK-wide housing crisis. There are plenty of towns where rents and house prices are affordable for people on average incomes. Flattish national rents over the last ten years mean that London’s higher rents must be balanced by falling rents elsewhere.

The second good point is that house prices measure more than just the cost of consuming housing. They are also affected by expectations of the future and prices of other assets and, indeed, money itself, in the form of interest rates. Better to look at rents, which only measure the price of housing consumption during a fixed period.

His worthwhile yet irrelevant point is that household growth has been slower than official projections, upon which the central plans for housing supply have been made. These projections were made by assuming that the fall in average household size in the years to 2001 would continue; in fact, it flattened out. So household numbers only rose in line with population, instead of faster.

But this point is ultimately irrelevant, for two reasons. First, part of the reason why households have stopped shrinking is because of housing shortages. Adults are living with parents for longer and sharing more frequently rather than living alone, because high prices are prompting people to economise on housing consumption.

Secondly, prices and rents offer a far more sophisticated guide to the demand for housing (and its relative shortage of supply) than comparing crude official statistics on the number of housing units and households.

The main problem is that we have too little housing in the economically dynamic places where jobs are available. The fact that housing is cheap in places hundreds of miles from where the majority of job vacancies are based is of little relevance. The fact that councils in depressed areas welcome housing developments, because of the construction jobs they provide and the prospect of regeneration, makes similarly little difference.


Crudely put, we have a marked shortage of homes in London, particularly inner and west London, where job vacancies are most common and highly paid.

Ian points to low rental yields as evidence of a lack of a problem with supply and demand for housing in London. This is true, but the yield is the wrong measure for the question he has in mind. The price of a residential property includes the value of the artificial scarcity of land imposed by restrictions.

A better measure would be to adjust the rental incomes by the additional rent possible if commercial considerations were the only limit on a developer, instead of planning restrictions. Potential yields are enormous. It’s not for nothing that developers try so hard to get permission for extra storeys on their buildings, accused of skull-duggery by the NIMBY groups who oppose them.

And these substantial potential yields indicate that there is indeed a major problem with supply and demand for places to live. Rents in London are the highest in the world (or near enough, depending on your index). They wouldn’t be for long, if developers and landowners were allowed to respond to those enormous potential profits by supplying the homes that high rents indicate we need.

More housing where it’s needed would provide much wider benefits, too, than just cheaper housing for those already living in housing unaffordability hotspots. More of us would be able to move to where the jobs are, not just in London but also other cities like Oxford, Cambridge, Bristol and York.

That would reduce demand and therefore housing costs in the places where people move from, but it would also improve labour markets, removing a block on people shifting their labour into more highly-valued (and highly-paid) uses.

And the knock-on effects on commercial property would further improve productivity. Drawing on work by economists Chang-Tai Hsieh and Enrico Moretti, the pro-housing group London YIMBY has suggested that allowing enough homes to be built where they’re needed could increase national income by 30 per cent.

Yes, we do have a housing crisis. Letting homes be built where they’re needed will fix it. And doing so might also offer at least a partial answer to our "productivity puzzle", too.

Whether or not today’s housing white paper will do enough to tackle the NIMBYism that is at the heart of the crisis is another matter entirely.

Rory Meakin is research fellow at The Taxpayers Alliance.

Want more of this stuff? Follow CityMetric on Twitter or Facebook.

 
 
 
 

“Every twitch, breath or thought necessitates a contactless tap”: on the rise of the chain conffeeshop as public space

Mmmm caffeine. Image: Getty.

If you visit Granary Square in Kings Cross or the more recent neighbouring development, Coal Drops Yard, you will find all the makings of a public space: office-workers munching on their lunch-break sandwiches, exuberant toddlers dancing in fountains and the expected spread of tourists.

But the reality is positively Truman Show-esque. These are just a couple examples of privately owned public spaces, or “POPS”,  which – in spite of their deceptively endearing name – are insidiously changing our city’s landscape right beneath us.

The fear is that it is often difficult to know when you are in one, and what that means for your rights. But as well as those places the private sector pretends to be public space, the inverse is equally common, and somewhat less discussed. Often citizens, use clearly private amenities like they are public. And this is never more prevalent than in the case of big-chain coffeeshops.

It goes without saying that London is expensive: often it feels like every twitch, breath or thought necessitates a contactless tap. This is where Starbucks, Pret and Costa come in. Many of us find an alternative in freeloading off their services: a place to sit, free wifi when your data is low, or an easily accessible toilet when you are about in the city. It feels like a passive-aggressive middle-finger to the hole in my pocket, only made possible by the sheer size of these companies, which allows us to go about unnoticed. Like a feature on a trail map, it’s not just that they function as public spaces, but are almost universally recognised as such, peppering our cityscapes like churches or parks.

Shouldn’t these services really be provided by the council, you may cry? Well ideally, yes – but also no, as they are not under legal obligation to do so and in an era of austerity politics, what do you really expect? UK-wide, there has been a 13 per cent drop in the number of public toilets between 2010 and 2018; the London boroughs of Wandsworth and Bromley no longer offer any public conveniences.  


For the vast majority of us, though, this will be at most a nuisance, as it is not so much a matter of if but rather when we will have access to the amenities we need. Architectural historian Ian Borden has made the point that we are free citizens in so far as we shop or work. Call it urban hell or retail heaven, but the fact is that most of us do regularly both of these things, and will cope without public spaces on a day to day. But what about those people who don’t?

It is worth asking exactly what public spaces are meant to be. Supposedly they are inclusive areas that are free and accessible to all. They should be a place you want to be, when you have nowhere else to be. A space for relaxation, to build a community or even to be alone.

So, there's an issue: it's that big-chain cafes rarely meet this criterion. Their recent implementation of codes on bathroom doors is a gentle reminder that not all are welcome, only those that can pay or at least, look as if they could. Employees are then given the power to decide who can freeload and who to turn away. 

This is all too familiar, akin to the hostile architecture implemented in many of our London boroughs. From armrests on benches to spikes on windowsills, a message is sent that you are welcome, just so long as you don’t need to be there. This amounts to nothing less than social exclusion and segregation, and it is homeless people that end up caught in this crossfire.

Between the ‘POPS’ and the coffee shops, we are squeezed further by an ever-growing private sector and a public sector in decline. Gentrification is not just about flat-whites, elaborate facial hair and fixed-gear bikes: it’s also about privatisation and monopolies. Just because something swims like a duck and quacks like a duck that doesn’t mean it is a duck. The same can be said of our public spaces.