Superstar hamlets? July 19, 2006
Posted by Brickonomist in Design, Environment, Housebuilding, Housing inequality, Housing markets, NIMBYs, Planning, Rural housing.add a comment
In an earlier post, I wondered whether London might one day turn into the kind of ‘Superstar City’ researchers have identified in the US. But according to today’s Guardian, it looks more like the Superstar syndrome (high income households taking over areas that are unique, desirable and feature little or no new construction) is happening in many parts of the English countryside:
It may be an over-simplification to argue that a form of social apartheid grips rural England, with traditional country dwellers confined either to the remaining council houses or the tied cottages of the big estates, rarely in contact with their neighbours – the superannuated, and rich. But the divisions are apparent.
A good place to start is the roof of England. Drive on the country’s highest road, where the lush North Pennines briefly meets a more barren landscape, and the pressures and conflicts of the countryside are soon evident. Down the winding Hartside pass, old farmhouses and buildings – which once supported hundreds of agricultural workers – have become the preserve of a new rural elite. At the bottom of the pass, and over the Eden valley on the edge of the Lake District, Kit Scott-Harden, aged 59, has farmed 300 acres on a tenancy most of his working life. With his income around £45,000 annually – 60% met by subsidy from the EU’s common agricultural policy – he’ll be lucky to break even this year.
Most farmers are now in their mid to late 60s. The industry is rapidly contracting. Farmers’ sons often leave the land. The result: empty properties. As upland farmers, and the few remaining agricultural workers struggle to make ends meet, wealthy incomers splash out hundreds of thousands for small cottages – and, sometimes, close to £1m for larger properties. Over two years ago a two-bed cottage in the hamlet next to the Scott-Harden farm went for £280,000 to an investor. “Terrifying price,” he says. “And it would be worth much more now.”
There’s usually plenty of space to build in these areas – the main obstacles are NIMBY attitudes, an over-protective planning system and inadequate funding for new social housing in rural districts.
Lord [Ewen] Cameron, a cross-bencher in the Lords and former chairman of the government’s Countryside Agency, can see what is happening from his farm in south Somerset. He is alarmed by the rigidity of a planning system blocking affordable housing initiatives. This has led to “serious demographic mismatch in the countryside”. Why, he wonders, do the authorities approve plans to convert buildings into holiday cottages, yet refuse plans for low-cost homes? He would like to see redundant farm buildings re-classified as “brownfield land” so that they can benefit from urban-style grants and incentives. “Why can’t we build, say, 50% for straight purchase and the rest for renting? That would benefit people all round.”
But, as things stand, Mark Shucksmith, a professor at Newcastle upon Tyne University, a government adviser and expert on rural housing and planning, says the countryside is becoming too skewed in favour of one class. “While people have a clear aspiration to live in the countryside, it is becoming much more exclusive,” he laments. “You have to ask that if only people with higher incomes can afford the move, how this chimes with the [government's] agenda of choice that is rooted in the context of social justice.”
As I said, NIMBYism is a big reason for resistance to new housing developments in rural areas, but it’s hard to disentangle pure selfishness from the quite justified perception of much new housing supply as ugly, sprawling and car-centric. This takes us back to the vexed questions of design quality and planning and funding new public transport, which I hope to look at in more detail in the near future.
Changing the overcrowding standard July 19, 2006
Posted by Brickonomist in Homelessness, Housing need, Local government, Overcrowding.add a comment
The statutory measure of overcrowding in England is a bit of an anomaly. From Tackling Overcrowding in England: A Discussion Paper:
Although the intention of the legislators in 1935 was that the standards should be regularly updated, they have in practice been carried over unchanged into the 1985 Act. They are as a result now well out of line with contemporary expectations. For example a couple with a boy aged 15 years and a girl aged 13 years in a one-bedroom flat would not be statutorily overcrowded because the father and son could share one room and the mother and daughter the sitting room (or even the kitchen).
This hasn’t in itself increased the number of overcrowded households – that’s driven by the availability of accommodation that is both suitable and affordable – but it has reduced the recognition and assistance available to people in overcrowded homes. Changing the standard might give overcrowded households more priority when it comes to accessing social housing, as opposed to homeless households who might be living in housing that’s at least big enough even if it is temporary.
With the publication of this discussion paper it does look as though the government really wants to tackle overcrowding. The main solution will still have to be building more larger affordable homes, but changing the standard should at least go some way towards removing a major distortion in the system for allocating social housing.
Superstar cities July 19, 2006
Posted by Brickonomist in America, Housing economics, Housing inequality, Housing markets, NIMBYs, Planning.add a comment
According to Joseph Gyourko, Christopher Mayer and Todd Sinai, ‘Superstar Cities’ arise when high income households are sorted (or sort themselves) into areas that are (a) desirable, (b) unique and (c) feature low rates of housing construction. Their very restrictiveness makes them desirable, and perhaps their desirability makes them more restrictive. A similar dynamic certainly appears to be happening in some parts of the UK, but will it ever go so far as to make London, for example, the exclusive domain of the rich?
Here’s the abstract from NBER (the full paper is here):
Differences in house price and income growth rates between 1950 and 2000 across metropolitan areas have led to an ever-widening gap in housing values and incomes between the typical and highest-priced locations. We show that the growing spatial skewness in house prices and incomes are related and can be explained, at least in part, by inelastic supply of land in some attractive locations combined with an increasing number of high-income households nationally. Scarce land leads to a bidding-up of land prices and a sorting of high-income families relatively more into those desirable, unique, low housing construction markets, which we label “superstar cities.” Continued growth in the number of high-income families in the U.S. provides support for ever-larger differences in house prices across inelastically supplied locations and income-based spatial sorting. Our empirical work confirms a number of equilibrium relationships implied by the superstar cities framework and shows that it occurs both at the metropolitan area level and at the sub-MSA level, controlling for MSA characteristics.
Income inequality and housing affordability July 15, 2006
Posted by Brickonomist in Housing economics, Housing inequality, Housing markets, Uncategorized.add a comment
There’s evidence that relative low income can lower subjective well-being: people feel worse when those around them earn more. But can earning relatively less make you objectively worse off, even if your own income doesn’t fall?
Apparently so. In a great bit of research, Janna Matlick and Jacob Vigdor find evidence that the increasing incomes of others can raise the price we pay for housing, leading to more income spent on housing or overcrowding. Especially in tight housing markets, like we have in many parts of the UK, “the poor do worse when the rich get richer”:
Do rising tides lift all boats? If raising the income of the wealthy increases the prices that the poor must pay for certain necessities, then it becomes more difficult to argue in favor of policies that exacerbate inequality on the grounds that they at least do not lower the incomes of the poor …
In the end, the evidence on this question is mixed, and it seems relatively clear that the answer depends critically on the elasticity of housing supply. In this sense, the study of demandside determinants of housing affordability problems should not be conducted in isolation from study of the supply side. In the United States, tight housing markets tend to be those where incomes are rising rapidly at the high end of the distribution, while incomes at the low end trend upward only slowly if at all. In these areas, the poor have experienced greater crowding, and there is at least some evidence that their expenditures on housing increase as well, though not in all specifications …
Do price effects negate the impact of “trickle-down” effects? The answer appears to be “sometimes.” The key to making rising tides lift all boats appears to be ensuring that there are more than enough boats to go around.
What this paper doesn’t cover is the further effect of higher house prices on inequality: in a rising market, those who could afford to buy enjoy windfall gains which they can use to help their children buy when the time comes, distorting the market further and leaving those who couldn’t afford to buy in the first place (and their children) even further behind. This effect is already quite marked in Britain.
Public attitudes to housing development July 13, 2006
Posted by Brickonomist in Housebuilding, NIMBYs, Planning.add a comment
In her interim report into the planning system, published last week, Kate Barker included the following table.
It’s interesting data, but importantly it’s also a bit incomplete. The figures here give the impression that people are much more opposed to social rented than to private housing (net support of -10 versus +28), but if you go to the original data (Q15 here) you can see that it is really flats that people are opposed to, with private flats getting the same net opposition as social rented ones. It’s not immediately obvious why this should be, but there are plausible possibilities – is it because flats tend to be more high-density, or because they’re often poorly designed in this country, or because they’re associated with unsociable or anti-social inhabitents, or because they mean more households per hectare and therefore more perceived strain on local services and amenities?
There are a few other interesting findings from that survey (called the ‘Saint Index’), such as high public support for getting more money or in-kind benefits out of developers through planning obligations and very strong support for case-by-case assessment of those obligations instead of using the fixed tariff approach apparently favoured by the government.
A room with a view … of the Pyramid Stage July 9, 2006
Posted by Brickonomist in Rural housing.add a comment
If you’re at the Glastonbury festival next year you might see something unexpected – ten units of social housing, built on land donated by the festival organiser, farmer Michael Eavis. Inside Housing has more details. I wonder where they are on the site? The critical question come June 2007 will be whether they’re downwind from the toilets or not. Also, will the temptation to sub-let to Coldplay or other visiting superstars prove too great?
Housing and hatred in Barking and Dagenham July 8, 2006
Posted by Brickonomist in Housing need, Local government, London, Planning.add a comment
Here’s another article focusing on the housing crisis as a key factor behind the recent electoral success of the racist British National Party in Barking and Dagenham. It suggests that the ease with which the BNP whipped up resentment over asylum seekers and other ‘outsiders’ apparently jumping the queue (sometimes, it was claimed, with the help of cash grants from neighbouring boroughs) for social housing is a bit of a puzzle, as there are only a handful of asylum seekers accommodated in the council’s housing stock. Charles Fairbrass, Labour leader of the council, suggests people are attributing shifts in the housing market to council policy:
There is a growing black middle class in London and many of them want to get on the property ladder. Because we have some of the cheapest housing in London, they choose to buy here. And when they buy ex-local authority property, people often assume that those properties are still local authority and they’ve been allowed to jump the queue.
I wonder if the movement of homeless households around London has something to do with it too. After all, according to the numbers in Figure 3.6 here, fully one third of the ‘privately rented’ housing in Barking and Dagenham is actually inhabited by homeless households who are being put up in rented accommodation while they wait (often years) for a permanent home. Many if not most of these households will be non-white, and many have probably been placed in Barking & Dagenham by other councils. This could well be perceived by locals as an influx of ethnic minorities into the borough’s social housing stock.
All this benefits nobody except the BNP and the (blameless) private landlords who get to collect extra-high rents (mostly funded through Housing Benefit) from their homeless tenants. The main solution has to be to increase the supply of permanent social housing to provide a decent permanent home to all those who need it.
Valley of the one-bed flats Part 2 July 7, 2006
Posted by Brickonomist in Design, Housebuilding, Housing need, London, Planning.add a comment
I posted a while ago in disappointment at the lack of family housing being planned for the Lower Lea Valley. Now it looks like the same applies to the wider Thames Gateway. That’s according to someone who should know – Eric Sorenson, chief exec of the Thames Gateway Partnership, writing in Building magazine:
What is striking in large parts of London Thames Gateway is the predominance in development of one and two-bed flats. It is as if there has been a significant over-reaction to the increasing number of smaller households …
We know from experience in Europe that higher-density flats can and do work for families. But they have to be reasonably sized, designed to be spacious and flexible, have good sized balconies, require good performance from local management and a well maintained public realm.
What we get too often here are small flats with insufficient commitment to address families’ requirements. Local authorities are becoming increasingly firm about family housing provision in their planning policies but, if there is unbalanced emphasis on housing numbers rather than the nature of the output, we simply won’t create sustainable communities in the Gateway.
I think the same goes for London as a whole, and probably the wider South East. It’s notable that in the proposed update to his London Plan, Ken Livingstone is gung-ho about a big increase in housing numbers and densities, but pretty much devoid of any effective policy to ensure those numbers consist of the family housing London needs, according to his own Housing Requirements Study.
Building in mediocrity July 5, 2006
Posted by Brickonomist in Design, Housebuilding.add a comment
Okay, so this isn’t directly about housing, but it is a scandal:
Billions of pounds are being wasted on new schools which are badly designed, poorly built and unsuitable for staff and students, according to a study by the government’s own advisers.
That’s CABE, and you can find a summary of their report here. Some key points:
- 31 per cent of schools were classified as ‘partially good’ and 19 per cent were assessed as ‘good’ or ‘excellent’. Half of the 52 schools reviewed were categorised as mediocre or poor.
- All of the good or excellent schools were completed in 2005, which suggests that overall design quality is getting better.
- Generally, schools performed best on issues of functionality and least well on build quality.
- Any procurement route can produce a good result, although schools using the private finance initiative (PFI) performed less well than other forms of contract. All but one of the lowest 10 schools were procured using PFI, whereas of the top 10 (all the good and excellent schools) only three were procured using PFI.
It’s that last bit that has me worried, because the government is in the middle of a £1.2 billion programme to build or refurbish social housing. Is there something about PFI that makes a badly designed product more likely, in housing as well as in education? An earlier CABE policy paper suggests there might be.
Reduced recycling restricts reinvestment July 1, 2006
Posted by Brickonomist in Housing economics, Housing investment, Housing markets.add a comment
I’ve posted before on how little net state investment there is in social housing in the UK. In large part this is because of the Treasury’s long-standing recycling initiative: it takes from local authorities three-quarters of the capital receipts from sales of council homes through the Right to Buy and uses them to fund its Decent Homes and new supply programmes. So it’s interesting that Right to Buy receipts look like they’re about to drop sharply just as the government has been making noises about spending much more on new social housing. Inside Housing has the details:
Right to buy proceeds set to plunge
By Martin Hilditch
Published: 30 June 2006
Plummeting right to buy sales look set to cut the amount of money the government makes from the programme by a quarter of a billion pounds.
Official statistics on the number of people buying their homes through the scheme in England in 2005/06 are
expected to show that sales fell by almost 50 per cent, Inside Housing understands.London is likely to see the biggest drop in sales although a decrease is expected in most regions. Yorkshire & Humberside is anticipating that the number of people exercising their right to buy will have fallen by a quarter.
In 2004/05, there were 49,983 homes sold through the right to buy. Figures for 2005/06 are due out next month.
Steve Partridge, director of Housing Quality Network, said the government, which takes 75 per cent of the capital receipts from right to buy sales, was likely to take the biggest financial hit.
A 50 per cent drop would see receipts fall by £250 million or more, he said.
‘It will certainly be a very interesting issue in the spending review because presumably they are going to have to downsize their forecast of right to buy receipts.
‘If that drops to £250 million then that is a big hole. It is now at the stage where even the increase in prices is not going to compensate for it.’
The fall in sales could also affect councils’ and arm’s-length management organisations’ ability to bring their homes up to a decent standard.
Many business plans have been based on the landlord having fewer homes to improve and more right to buy receipts to spend on the work.
‘I have seen in a number of councils it [the number of sales] just go through the floor,’ Partridge added. ‘One downside financially is that there might be more homes to make decent.’
A number of local authority sources told Inside Housing that right to buy sales had been hit by the growing affordability problem around the country. With a fixed discount and rising house prices tenants were thinking twice about buying, they said.
The amount of time a tenancy has had to run before residents could buy their homes was also increased from two to five years in January 2005.
One source said that government officials had warned them that the fall would have an impact.
‘What is coming through from government is that funding will be tight next year because of the drop,’ she said.
A London based source said the reduction in sales could be partly blamed on a reduction in the right to buy discount in the capital from April 2004.
