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Your argument is, to paraphrase, “it’s less that people are priced out of London, it’s just that London is full”. This argument assumes that the property market

Your argument is, to paraphrase, “it’s less that people are priced out of London, it’s just that London is full”. This argument assumes that the property market is a free market, which it is not. It’s subsidised and manipulated by government and banks. Here we go: 1. Planning laws constrain building out into the green belt and upwards into the skies. There’s a lot of space above and around London that could be built on and in. But we don’t. This throttles supply with price consequences. 2. Tax laws privilege home ownership in the UK. Better to hold your wealth in property than cash or shares because it’s (a) capital gains tax expempt (first home) and (b) inheritance tax efficient. You pay a premium for that perk. 3. Foreign ownership laws leading to London property becoming a global asset class and wealth stash. Again - this creates a premium. Many people would think a Russian oligarch buying up a few luxury flats in London does not a housing crisis make. Economists would however say that all impact is at the margin, and this is probably amplified in a sticky market like London property. 4. Help-to-buy. WTF. This was the government priming the demand pump ahead of an election. 5. Banks realizing that the London property market is basically the magic money tree: increase credit limits, increase loan size, increase profits, rinse and repeat. And the governement will bail them out if there’s a crash. Go figure. So in short, I think a statement that London is full also needs to recognize the extent to which governments use property prices to boost popularity- and its also one of the reasons the UK economy is looking problematic - for far too long property rather than productive investment has sucked up spare cash.

esotericn 8y ago
I think a lot of this is true too. In particular I think lending is out of control (HTB is indeed a complete farce). In the UK we could basically fix this stuff overnight by just building council houses on a trivial amount of the green belt and bringing back the idea that everyone just gets a family home. It won't happen because we have a broken political system. But I also think a major pressure relief valve would be somehow eliminating this idea that everyone has to live in SF/NYC/London/etc. It just doesn't make sense on any level. We can't just have every part of the world outside of a few capital or capital-like cities turn into an economic wasteland.
- PrimalDual 8y ago
  This sentiment I don’t understand. What’s the problem with aggregating most of the population in a few urban centers? It makes sense to me from an economic point of view where the productivity of clusters benefits greatly from density. It also makes sense from an environmental perspective because it reduces sprawl and using elevators instead of cars should significantly lower carbon emissions. More importantly, unlike other environmentally friendly policies, like carbon taxes or not eating beef, people actually want to move to the more successful cities. Although every individual is familiar with the downsides of cities the economies seem to be large enough to overcome them.
  - atq2119 8y ago
    A big problem of aggregation is fragility. You are literally putting all your eggs into a small number of baskets.
    - fjsolwmv 8y ago
      The number of cities isn't small. Economy of scale overrides a slight lack of range.
  - Retric 8y ago
    Traffic is one issue. 2D road systems only scale so far.
    - esotericn 8y ago
      It's not just traffic. It's literally the fact that a downtown has a finite capacity. Walk about in Central London on a weekday and tell me if you doubled the population that'd be fine and dandy.
  - lozenge 8y ago
    High density housing in the UK has a bad rep. It has not been done well in the past. Now only 8% of Londoners live in a high rise, and very few live in mid rise (3-6 storeys, as common in many European cities) https://en.wikipedia.org/wiki/Tower_blocks_in_Great_Britain https://en.wikipedia.org/wiki/Tower_blocks_in_Great_Britain

esotericn 8y ago

I think a lot of this is true too. In particular I think lending is out of control (HTB is indeed a complete farce). In the UK we could basically fix this stuff overnight by just building council houses on a trivial amount of the green belt and bringing back the idea that everyone just gets a family home. It won't happen because we have a broken political system. But I also think a major pressure relief valve would be somehow eliminating this idea that everyone has to live in SF/NYC/London/etc. It just doesn't make sense on any level. We can't just have every part of the world outside of a few capital or capital-like cities turn into an economic wasteland.

PrimalDual 8y ago
This sentiment I don’t understand. What’s the problem with aggregating most of the population in a few urban centers? It makes sense to me from an economic point of view where the productivity of clusters benefits greatly from density. It also makes sense from an environmental perspective because it reduces sprawl and using elevators instead of cars should significantly lower carbon emissions. More importantly, unlike other environmentally friendly policies, like carbon taxes or not eating beef, people actually want to move to the more successful cities. Although every individual is familiar with the downsides of cities the economies seem to be large enough to overcome them.
- atq2119 8y ago
  A big problem of aggregation is fragility. You are literally putting all your eggs into a small number of baskets.
  - fjsolwmv 8y ago
    The number of cities isn't small. Economy of scale overrides a slight lack of range.
- Retric 8y ago
  Traffic is one issue. 2D road systems only scale so far.
  - esotericn 8y ago
    It's not just traffic. It's literally the fact that a downtown has a finite capacity. Walk about in Central London on a weekday and tell me if you doubled the population that'd be fine and dandy.
- lozenge 8y ago
  High density housing in the UK has a bad rep. It has not been done well in the past. Now only 8% of Londoners live in a high rise, and very few live in mid rise (3-6 storeys, as common in many European cities) https://en.wikipedia.org/wiki/Tower_blocks_in_Great_Britain https://en.wikipedia.org/wiki/Tower_blocks_in_Great_Britain