Leith van Onselen | Macro Business | April 24, 2013
Those who have followed this blog for a while will know that I am highly sceptical of the UK housing system, which I believe operates world’s worst practice when it comes to social and economic outcomes.
Central to the UK’s housing malaise is its dysfunctional supply system, which has become increasingly constipated following sixty years of urban consolidation policies and strict planning. When combined with decades of easy credit and policies aimed at stoking demand, UK housing has displayed high levels of price volatility, as well as extreme unaffordability
The forced urban consolidation caused by the UK planning system – whereby only 8% of the UK is urbanised, compared with roughly 28% in Germany, 20% in Italy, 28% in the Netherlands, 18% in Switzerland, and 9% in Spain – has also caused Britons to live in some of the worst and most cramped housing conditions in Europe. As shown by the below table, which comes from the London School of Economics, new homes in the UK are, without exception, the smallest in Western Europe:
And yet despite the size of UK homes shrinking, they remain amongst the most expensive in Europe, caused primarily by decades of strangulating urban land supply and escalating land costs.
Overnight, the UK Telegraph published an article revealing the shrinking size of UK apartments as developers attempt to provide ‘affordable’ housing options in the face of escalating land costs:
Developers faced with sky-high land prices are cramming a lounge, kitchen, bedroom, and bathroom into just 46 square metres.
That is the same size as a Jubilee Line tube carriage, according to the Royal Institute of British Architects (RIBA)…
A room needs natural light from just one window measuring a tiny 45cm x 45cm, or the size of an average cushion.
As a result, thousands of people are now living in a “cramped, dark, artificially lit environment”, the RIBA says.
The average British home is getting smaller, having shrunk from 85 square metres to 76 square metres, and from 5.2 rooms to 4.8 rooms.
It means Britons now have the smallest homes in Western Europe…
A third of home owners, 32 per cent, say they would like more space, and 20 per cent would like more natural light.
In fact, for those living in a home that is two to ten years old, a lack of space is their main reason for wanting to move out.
Three quarters – 75 per cent – consider a lack of space a “key problem”, and 69 per cent say they do not even have enough room for their possessions.
The RIBA report, The Case for Space, says: “Space is an important factor when people are choosing a home, but many feel that newly built homes aren’t big enough.
“Research suggests consumers are right to be worried.
“A lack of space has been shown to impact on the basic lifestyle needs that many people take for granted, such as having enough space to store possessions or even to entertain friends.
“In more extreme cases, lack of adequate space for a household has also been shown to have significant impacts on health, educational attainment and family relationships.”
Kevin McCloud, presenter of Channel 4 show Grand Designs said the creation of green belt land had increased land prices and in turn resulted in smaller homes.
He said: “The Town and Country Planning Act effectively rationed the distribution of land for development by producing the green belt.
“That meant land started to be traded as a commodity and increased in value.
“We have enormous quantities of green belt and one of the best preserved countrysides in Europe.
“But the price we pay for that ‘green and pleasant land’ is very small homes.
“As the value of property has gone up, we have had to get used to buying smaller places.
“Ultimately, the person who suffers is the homeowner.”
Urban planners that deride “urban sprawl” in favour of “compact and efficient cities” often pay too little attention to the deleterious costs imposed on citizens forced to live in cramped and expensive conditions. The UK, which has operated urban containment policies longer than anywhere else, highlights the many flaws in their approach.