Britain's housing crisis is a human disaster

http://www.theguardian.com/society/2015/mar/14/britain-housing-crisis-10-ways-solve-rowan-moore-general-election

59 40 11 years ago

biscotti• 11 years ago

I've a one bedroom in a flatshare in east london, its nothing special & costs north of £1k / month. If a political party outlined how they'd fix spiralling house prices they'd get my vote.

UweSchmidt3• 11 years ago

Um, here is the "outline":

A law that limits the rent increase to inflation + x.

Notes: Circumvention by "also buy this used kitchen for a ridiculous amount" would be illegal as well. Sucks for anyone trying to move into the city but doesn't force everyone who lives in the city to move out.

_yosefk2• 11 years ago

Sucks for anyone trying to move from one apartment to another. Sucks for anyone trying to move out from their parents' apartment. Sucks for anyone whose landlord invests as little as possible into maintaining the building.

(Obviously sucks for anyone who's invested in real estate but we don't care for these folks, do we?.. Well, it sucks for everyone else as well.)

jseliger2• 11 years ago

If a political party outlined how they'd fix spiralling house prices they'd get my vote.

It's really not that hard: remove height limits and parking minimums, per Yglesias in The Rent Is Too Damn High: http://www.amazon.com/Rent-Too-Damn-High-Matters-ebook/dp/B0.... Glaeser's The Triumph of the City is also good on this subject and discusses the UK more: http://www.amazon.com/Triumph-City-Greatest-Invention-Health.... This is a simple issue of supply and demand: rising demand in the face of limited supply means higher prices. Want lower prices? You need more housing or fewer people who want it. The former is easy to accomplish with century-old technologies, like steel and elevators.

twic3• 11 years ago

What do you mean by 'parking minimums'?

FWIW, the London Plan currently contains restrictions on the maximum amount of parking provided:

http://www.london.gov.uk/thelondonplan/docs/londonplan08_ann...

  table A4.2 Maximum Residential Car Parking Standards
  
  Predominant housing type   4+ bed units   3 bed units   1–2 bed units
  Car parking provision      2–1.5 spaces   1.5 – 1 space 1 to less than 1
                             per unit       per unit      space per unit*

  * All developments in areas of good public transport accessibility and/or
  town centres should aim for less than 1 space per unit.

ChainsawSurgery• 11 years ago

Obviously also applicable to SF and Manhattan/Brooklyn.

It's interesting to compare this to other cities: a cursory glance at LA craigslist shows some apartments in nice areas that would easily cost twice as much in SF/Manhattan. Same with Chicago.

Is it really just population density? A cursory google search says that SF's population density is about 17,000 people per sq. mi, which is about the same as West Hollywood. Yet looking at apartments in West Hollywood, I see apartments much nicer than I would in SF for the price. Maybe I'm grossly oversimplifying though.

But then is the answer really just 'sprawl'? Are Chicago and LA only 'reasonably priced' because they're so expansive? Is that how our cities have to move lest they suffer some sort of housing implosion?

As it is, I don't understand how anyone earning minimum wage lives in SF/Manhattan - or why they'd even want to commute in to Manhattan to work for Chipotle if they don't.

fennecfoxen• 11 years ago

The answer isn't just sprawl, it's "lots of housing", which can mean more tall apartment buildings on a little land instead of individual homes on a lot of land.

Unfortunately, San Francisco proper is very very hostile to real estate development for a variety of reasons and is trapped in a steadily worsening local maximum. A large part of that is policies like rent control, which bestows a sort of quasi-ownership of an apartment that may be even more effective than real ownership at spreading around the benefits of what the article calls a "tax by the haves on the have-nots, and by the old on the young."

Building out the suburbs could also be an answer if you could trust the region's government agencies to provide decent transit options, whether public transit or highways. You can't. At least if you're commuting to work in Manhattan you have a cheap $2.50 subway ride into town from many places that are much further away than you do in San Francisco.

Tiktaalik3• 11 years ago

The underlying belief is that the market will provide, if only it were properly stimulated and enticed, but it is one unsupported by evidence. At no time since the second world war has the private sector built at the rate now required, and usually it has fallen a long way short.

Worth noting for folks who think that supply is the only problem. Similarly in my home of Vancouver the construction of towers has been constant for decades and prices have only skyrocketed in response.

Certainly if you stopped building completely you'd eventually have a real problem, but the evidence is clear to me that you'll never reach the incredible supply levels that would cause prices to drop (why would builders do this anyway?).

There is also what Ebenezer Howard, the inventor of garden cities, called the “unearned increment”, which is the uplift in value when land becomes available for housing. It was the basis on which postwar new towns were built. Currently it is being squandered – when the government, for example, relaxes planning constraints on certain properties, or makes it easier to convert offices or shops into homes they drench the lucky owners of such places in cash, without asking for much in return.

Vancouver captures this. It goes toward community centres, the arts and increasingly housing. http://vancouver.ca/news-calendar/community-benefits-from-de...

Brakenshire• 11 years ago

the evidence is clear to me that you'll never reach the incredible supply levels that would cause prices to drop (why would builders do this anyway?).

It's the same as in any other market, people will carry on doing things while there is significant profit it in. A builder can only stop another builder by forming a cartel.

Also, bear in mind that just because house prices have gone up as decent numbers of buildings have been put in place, it doesn't mean they wouldn't have gone up more if supply had been even more constrained.

There probably is some self perpetuating element to house building - if prices are cheaper than they would otherwise be, more people would move to a city, so that means there is an effwct of supply creating more demand. But I think that occurs at the edges. Most people don't move city or in particular country for the house prices.

orangecat• 11 years ago

Similarly in my home of Vancouver the construction of towers has been constant for decades and prices have only skyrocketed in response.

The cause and effect probably goes the other way.

why would builders do this anyway?

Why do gas stations lower prices when oil falls? If they don't, their competitors will.

Tiktaalik3• 11 years ago

Yes the cause and effect goes the other way, I just mean to reinforce that the added supply didn't move the needle.

Certainly prices would be higher if the buildings hadn't been built, but one wonders just how many buildings does one have to build to get prices to drop? Possibly it's an unrealistically high number.

jseliger2• 11 years ago

Orangecat's comment is appropriate: https://news.ycombinator.com/item?id=9207631 but I'll note too that Vancouver, like other cities, is probably substantially still underbuilding the market—which high prices reflect. Houston, on the other hand, is not doing that: http://marginalrevolution.com/marginalrevolution/2015/03/hou... :

Unlike most other big cities in America, Houston has no zoning code, so it is quick to respond to demand for housing and office space. Last year authorities in the Houston metropolitan area, with a population of 6.2m, issued permits to build 64,000 homes. The entire state of California, with a population of 39m, issued just 83,000.

Which is why so many people are moving to Texas. http://www.bizjournals.com/austin/news/2014/12/23/big-tex-in... is one link.

Tiktaalik3• 11 years ago

Vancouver may be underbuilding, but the point I am trying to make is that the amount you have to build to have a notable impact on price is probably a lot more than people think. I brought up Vancouver because I know that HN is very SF-oriented and there is extremely little development, and so people may be lured into thinking that's the only issue. In Vancouver I feel there's quite a bit of development, but the city faces the same issues. Similarly we see cities such as NYC and London where development is constant not being able to lower prices. It's not likely to be a problem that can be solved purely by the market providing supply. Supply is necessary but there are many other variables.

Houston's endless sprawl is not technically emulatable for many cities and the design of the city is undesirable to many. I'm not sure it's an example that people would choose to follow.

bbanyc• 11 years ago

Although Houston doesn't have zoning, it does have development regulations in place that mimic the density restrictions of cities with zoning - lot sizes, parking minimums, etc. In effect the entire city is one big zone.

http://www.slate.com/blogs/moneybox/2011/11/30/the_myth_of_z...

O____________O• 11 years ago

in my home of Vancouver the construction of towers has been constant for decades and prices have only skyrocketed in response.

My friends in Vancouver have told me that many of the modern buildings only have something like a 35% year-round occupancy rate, and that they're largely owned by foreigners as summer homes.

nickstefan122• 11 years ago

The Vancouver market is probably out of wack due to foreign money looking for a place to park.

Animats• 11 years ago

"Another reason is that inflation in housing – so taboo when it comes to other commodities – has since the 1980s been celebrated by governments and encouraged by policies on taxation and borrowing."

Right. Rising house prices are just runaway inflation. If inflation indexes include housing (which, in the US, they did until the 1980s) inflation is much higher.

dasmoth• 11 years ago

UK too: http://en.wikipedia.org/wiki/Retail_Price_Index

For most purposes, the UK now uses a measure (CPI) which excludes housing costs. However, RPI is still used when calculating changes to the state pension.

leaveyou2• 11 years ago

"When asked about the poor, the Market Economy raised one finger of the Invisible Hand and whispered.. fk the poor" youtube.com/watch?v=eBuC_0-d-9Y

richardwigley• 11 years ago

So, taking the office of national (UK) statistics - in 2013 the growth rate of the population is 0.6%, on 64 million. Giving you 384,000 extra per year - about half of the growth is (births - deaths) and the other half is net migration [1].

Meanwhile from 1990 onwards we're seeing an average of less than 200,000 [2] - In the last few years the rates are the lowest for the time period on the graph (back to the 1970s).

[1] http://www.ons.gov.uk/ons/rel/pop-estimate/population-estima...

[2] http://www.bbc.co.uk/news/magazine-30776306

raverbashing2• 11 years ago

British isles urbanism is a joke

Terraced houses? In a place with high housing demand? Really?

You don't need to go to NYC heights, just look at what France and Germany do

They seem to hang on their historic buildings, with cramped accommodations that cost an arm an a leg to follow current regulations.

It's similar in Ireland, really.

room271• 11 years ago

Thing is, if you own one of those houses, which is true for a lot of the older generation, it's pretty nice.

Of course, if you're not rich and trying to get on the housing ladder now, things are pretty difficult.

design-of-homes• 11 years ago

"Terraced houses? In a place with high housing demand?"

What's wrong with terraced housing? It is more suitable for high-density developments than detached or semi-detached housing. A mixed development of houses and flats brings in a variety of different households and people. This makes a place much more attractive to live in than a place with only one type of dwelling. Well-planned terraced housing doesn't have to lead to sprawl.

In the UK, families with growing children have an aversion to flat living. It may be irrational, but this attitude hasn't changed in decades and is unlikely to change in the future.

raverbashing2• 11 years ago

What's wrong with terraced housing?

It's less dense than apartments.

In the UK, families with growing children have an aversion to flat living.

Maybe because of the abysmal quality and ridiculous size of most accommodations.

Brought to you by people that think carpet in a bathroom is acceptable.

guard-of-terra2• 11 years ago

In Russia there is a popular family of conspiracy theories where UK is the driving force behind most events of the last 100 years, including rise and fall of the USSR.

If so, it doesn't look like UK is able to extract much for its own citizens from said world domination.

leaveyou2• 11 years ago

The UK middle and upper classes are doing fine (although the castle development sector has slumped this century). The UK poor on the other hand, yes, they fail to extract enough welfare in order to keep up with the new middle class of landlords.

guard-of-terra2• 11 years ago

Having poor classes is a decision. Some countries choose to avoid keeping people poor.

twic3• 11 years ago

I'm not sure i'd say the middle class is doing fine. The older part of the middle class is largely okay. The junior division, though - anyone who doesn't already have a house and a good pension - has a pretty bleak outlook. Unless they're making Google/stockbroker money, or live in the North.

The working class certainly have it much worse, though.

tsotha• 11 years ago

I'm always amazed to see the same people who place all sorts of statutory restrictions on new housing blame the free market when there's not enough housing.

nickstefan122• 11 years ago

Exactly! How can we say the free market isn't keeping up when it's hardly free? California has an insanely slow build rate because of how much red tape sits in front of it. This slow build rate leads to less housing which gives us high prices. And then people seem to think we somehow need even more red tape to save the day.

gopi• 11 years ago

I think UK needs US style property taxes to discourage this 'housing as investment' behavior. Yes, UK has council tax but from what i understand its not that high.

In most US cities (except SF, LA, NYC) the ratio of average house price to median income is very reasonable (about 2.6). One main reason is the high property taxes which average about 1.5 to 2% of the house value. The tax also increase substantially for second homes. This discourages using a second house as investment/store of value.

Britain's housing crisis is a human disaster

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