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We often hear here (Berlin) that the housing affordability crisis is due to not building enough housing...Yet London apparently built loads in the last 20 years

by ido 3y ago

We often hear here (Berlin) that the housing affordability crisis is due to not building enough housing...Yet London apparently built loads in the last 20 years and it's still as unaffordable as ever (or even more than ever)? Is there any data showing that if we let loose and build a ton of housing that purchase prices and (especially) rents will reduce significantly? It's intuitively true but all the cities you can see a ton of construction in have also gone from "expensive" to "more expensive" at the same time. Did any major city people want to live in got more affordable (or stayed affordable) in the last 10-20 years?

HPsquared 3y ago
The construction is a response to the high prices. Prices would be even higher without the construction that did happen.
- ido 3y ago
  I'm not suggesting to stop building, I'm asking what is the solution to housing unaffordablity?
  - lotsofpulp 3y ago
    If the goal is to reduce prices, then the solution is some combination of increasing supply and reducing demand. Increasing supply of housing in London, or increasing supply of cities with qualities similar to London so that demand for London decreases. Or reducing the number of people eligible to live in London. Increasing prices for labor at the bottom is also an option. Again, reduce supply of labor by offering free education to obtain higher paid work, etc. Note that there will always be a tier of society who are at the edge of affordable for any desirable area. Not that efforts should not be continuously be made, but as some people are helped, others will arrive to compete (due to the desirability).
mytailorisrich 3y ago
Many new flats target above average earners. London is attractive. And population is booming overall (UK population 2000: 59 million, 2023: 67.6 million).
Filligree 3y ago
People are willing to move around. So if a single city builds more, that slightly decreases house prices… everywhere else. The specific city might see then rise, instead. It’ll grow, and that generally makes prices go up.
barnabee 3y ago
1) Housing affordability relates to building relative to growth rate. For a variety of reasons, inlcluding both London's glboal appeal and a fact that it is so dominant culturally, economically, etc. within the UK it's likely this rate of increasse was still not enough. 2) A lot of the building has not necessarily been what you'd call affordable. While you will get some benefit moving wealthier people, expats, and short term business lets, etc. to new stuff, that's way less efficient for solving the problem of affordability than just building enough homes for the people who need them directly. 3) Too much of London's (new and existing) real estate is owned as an investment and goes mostly unoccupied. This is a scandal and there should be large tax penalties for unoccupied housing. I think what you hear is true but it is not the whole truth. It would be easy to allow developers in to build new housing in a way that wouldn't help at all (but would make them lots of money).
- lotsofpulp 3y ago
  4) smaller households. You can add 50% more housing, but if more people are spending more of their years single, and desiring to live in their own abode, then increase in demand could easily outpace increase in supply.
  - fauigerzigerk 3y ago
    The number of people per dwelling went up though, so that hasn't happened, at least not on average. But I think the average could be misleading if the household size had gone up significantly in council homes, hiding a slightly falling household size in the private sector. But that's pure speculation.
- mytailorisrich 3y ago
  The elephant in the room is population growth.
  - barnabee 3y ago
    Cities like London could absorb pretty significant population growth with high quality, high density home building of the right type, in the right areas as long as they also invest in infrastructure and services too. Obviously making up the infrastructure and investment gap in other medium and large UK cities might make more sense. Most of the UK’s next 10-20 cities by size (at least) could probably take on a doubling or more in population while also becoming wealthier, easier to get around, and better overall for everyone who lives in them. Just needs competent government and proper investment in the right places, which have sadly been far from forthcoming for a while now.
calpaterson 3y ago
The answer is that London has grown (much) faster than new homes have been built. Net migration to the UK has been about 250k per year (with some variance) since 2000. I remember reading somewhere that 2/3 of that was to London. So you'd need to add hundreds of thousands of homes per year just to break even. Instead much less than 100k are built, usually under 40k. There's other reasons for the price and rent rises but this is one of the big ones.
azza2110 3y ago
London prices have been high for a long time but growth has been more reasonable since the flat construction boom. Eyeballing from a chart here (https://www.plumplot.co.uk/London-house-prices.html https://www.plumplot.co.uk/London-house-prices.html) - 1995 to 2010: 300% growth (10% p.a.) - 2010 to 2023: 75% growth (4% p.a.)
illwrks 3y ago
Two of my neighbours don't live in their London properties... The live elsewhere in the UK and come to London once month or so for meetings. Id never seen this before, but I assume this might be part of the problem, properties underutilised.
- ido 3y ago
  I also know multiple people who hold apartments in Berlin but spend most of their time elsewhere, and keep it “just in case” for occasional visits.
Sakos 3y ago
600k in twenty years is nowhere enough for a major city like London.

by ido 3y ago

HPsquared 3y ago

The construction is a response to the high prices. Prices would be even higher without the construction that did happen.

ido 3y ago
I'm not suggesting to stop building, I'm asking what is the solution to housing unaffordablity?
- lotsofpulp 3y ago
  If the goal is to reduce prices, then the solution is some combination of increasing supply and reducing demand. Increasing supply of housing in London, or increasing supply of cities with qualities similar to London so that demand for London decreases. Or reducing the number of people eligible to live in London. Increasing prices for labor at the bottom is also an option. Again, reduce supply of labor by offering free education to obtain higher paid work, etc. Note that there will always be a tier of society who are at the edge of affordable for any desirable area. Not that efforts should not be continuously be made, but as some people are helped, others will arrive to compete (due to the desirability).

mytailorisrich 3y ago

Many new flats target above average earners. London is attractive. And population is booming overall (UK population 2000: 59 million, 2023: 67.6 million).

Filligree 3y ago

People are willing to move around. So if a single city builds more, that slightly decreases house prices… everywhere else. The specific city might see then rise, instead. It’ll grow, and that generally makes prices go up.

barnabee 3y ago

1) Housing affordability relates to building relative to growth rate. For a variety of reasons, inlcluding both London's glboal appeal and a fact that it is so dominant culturally, economically, etc. within the UK it's likely this rate of increasse was still not enough. 2) A lot of the building has not necessarily been what you'd call affordable. While you will get some benefit moving wealthier people, expats, and short term business lets, etc. to new stuff, that's way less efficient for solving the problem of affordability than just building enough homes for the people who need them directly. 3) Too much of London's (new and existing) real estate is owned as an investment and goes mostly unoccupied. This is a scandal and there should be large tax penalties for unoccupied housing. I think what you hear is true but it is not the whole truth. It would be easy to allow developers in to build new housing in a way that wouldn't help at all (but would make them lots of money).

lotsofpulp 3y ago
4) smaller households. You can add 50% more housing, but if more people are spending more of their years single, and desiring to live in their own abode, then increase in demand could easily outpace increase in supply.
- fauigerzigerk 3y ago
  The number of people per dwelling went up though, so that hasn't happened, at least not on average. But I think the average could be misleading if the household size had gone up significantly in council homes, hiding a slightly falling household size in the private sector. But that's pure speculation.
mytailorisrich 3y ago
The elephant in the room is population growth.
- barnabee 3y ago
  Cities like London could absorb pretty significant population growth with high quality, high density home building of the right type, in the right areas as long as they also invest in infrastructure and services too. Obviously making up the infrastructure and investment gap in other medium and large UK cities might make more sense. Most of the UK’s next 10-20 cities by size (at least) could probably take on a doubling or more in population while also becoming wealthier, easier to get around, and better overall for everyone who lives in them. Just needs competent government and proper investment in the right places, which have sadly been far from forthcoming for a while now.

calpaterson 3y ago

The answer is that London has grown (much) faster than new homes have been built. Net migration to the UK has been about 250k per year (with some variance) since 2000. I remember reading somewhere that 2/3 of that was to London. So you'd need to add hundreds of thousands of homes per year just to break even. Instead much less than 100k are built, usually under 40k. There's other reasons for the price and rent rises but this is one of the big ones.

azza2110 3y ago

London prices have been high for a long time but growth has been more reasonable since the flat construction boom. Eyeballing from a chart here (https://www.plumplot.co.uk/London-house-prices.html https://www.plumplot.co.uk/London-house-prices.html) - 1995 to 2010: 300% growth (10% p.a.) - 2010 to 2023: 75% growth (4% p.a.)

illwrks 3y ago

Two of my neighbours don't live in their London properties... The live elsewhere in the UK and come to London once month or so for meetings. Id never seen this before, but I assume this might be part of the problem, properties underutilised.

ido 3y ago
I also know multiple people who hold apartments in Berlin but spend most of their time elsewhere, and keep it “just in case” for occasional visits.

Sakos 3y ago

600k in twenty years is nowhere enough for a major city like London.