Beautiful article by Prof. Tim Leunig in today's FT, saying that the government should stop micro-managing and leave it up to the markets.
"Hurrah!", shout the Tories.
"Boo!", shout the socialists.
Well, in this case, probably not...
... because the article is referring to the housing market, saying that homes should be built where land prices are highest, i.e. round London, Oxford and Cambridge. And these are Tory NIMBY heartlands. I can already hear them muttering about "concreting over the South East", "unsustainable development", "overburdened infrastructure", "mass immigration" and "the UK is much more densely populated than France or Germany"* and so on.
So funnily enough, as shit as Labour's planning interventions have been and always will be, I think it's one-nil to the socialists this time.
* It was never clear to me what the population densities of France and Germany have got to do with sensible housing policy in the UK, but the NIMBYs keep trotting it out.
Classy
2 hours ago
5 comments:
Except you know and I know Mark that the problems of housing prices are not solely related to supply and demand. Tim believes that he can halve house prices by increasing supply in the right places. Trouble is, even in a small city like Oxford, the outskirts are, by and large, not the right places. They are and will remain "marginal" land, not really able to make anyone any better fitted out for participation in the better locations they ought to be using to minimise their travel to work, shoip, play and socialize.
I blogged here specifically about the Oxford situation and the misinterpretation (probably deliberate) of the data that showed what the housing need is.
Tim is, sort of, a fellow LVTer - though he beieves I think that his own idea for "Community Land Auctions" is "LVT for the 21st Century" (most other Georgists don't seem to agree). And he also believes that his CLA idea can be sold to "NIMBYs" on the basis that it could fundd a council for many years, reducing local taxation to near nil if they allow a sustainable amount of development in their area.
Jock, agreed, of course, except for this ...
"even in a small city like Oxford, the outskirts are, by and large, not the right places"
If land values are high there, they must be the right places, I can't fault him on that logic.
I don't complain about much freer granting of planning permission: when someone got permission to build a bungalow just behind our cottage in a lovely village 30 years ago, I accepted it as reasonable, though 'twas a pity for us. But building on the Green Belt is crooked. People were given to uinderstand that that land was to be "green" in perpetuity; they paid for their houses on that understanding. Tearing up contracts is barbaric.
They're high because people are rent seeking already IMHO.
The fact that nobody seems to actually grasp the level of "need" properly and see other ways of addressing it (ie LVT encouraging existing communities to redevelop more efficiently) is playing into the hands of the rent-seekers. In which case, Tim's CLA suggestion will certainly recoup some of that hope value.
Buyers will be conned into accepting the urban fringe Barratt boxes as a step onto the ladder, but let's face it, it's hardly optimal use of the rest of the city. I know I would not want to live an hour away from work - effectively costing me an extra £4000 a year on top of my housing costs in "lost" commute time and travel costs.
Dearime, it seems a tad thin to claim that there is such an unwritten contract.
There are two possible solutions here (which are not mutually exclusive)
a) have LVT - to encourage more efficient use of existing houses and land of high value, and/or
b) be more generous with planning permission.
Restricting planning permission has a real genuine cost to society as a whole, and those who live in the stockbroker belt who refuse to contemplate either:
a) paying for the privelege of being able to dictate how surrounding land may be used via LVT, and
b) allowing houses to be built where they are needed, as dictated by market forces (i.e. in areas where land values are high)
are basically, as Jock says, "rent seekers", they want something for nothing.
I am a rabid free market economist, I don't think people should get something for nothing (other than basic flat rate benefits, of course).
I have done enough posts on LVT. I shall not rehearse all the arguments again here.
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