Planning and Building Control Today:
The UK planning system - fit for purpose?
6 July 2016
In the first of a two-part article discussing the British planning system, Christian Hilber, Associate Professor of Economic Geography at the London School of Economics, argues that the UK planning system has serious flaws and delivers benefits only at excessively high costs, mainly hurting the young.
There is no denial: the UK faces a serious housing affordability crisis. This crisis is not a short-term phenomenon, nor the result of a financial bubble. The crisis has been brewing for several decades. Over the last 45 years, house price growth in the UK has been faster in real terms than in any other OECD country and has far outstripped earnings growth. Normally when demand is rising, construction booms as well and that eases price growth. This has not happened in the UK; construction of new housing has been decreasing more or less steadily since the late 1960s from 353k units in 1968 to 118k units in 2014, leading to a very substantial and ever-growing housing shortfall. Not only that; newly built homes are also about 40 percent smaller than in similarly densely populated European countries.
In the Greater London Area (GLA) the problem is particularly acute. To illustrate this, the average house price in the GLA has gone up by £65.2k year-on-year since March 2015. The latest average household income estimate for the capital for 2013 is £51.8k. Put differently, last year, the average London homeowner earned more from capital gains than a renter from working all year long. It is, therefore, no surprise that young adults without wealthy parents are increasingly priced out from getting onto the owner-occupied housing ladder. Renting in the private sector is similarly unaffordable, so the young - even the highly skilled - increasingly have no other option but to stay at their parents' home longer or leave the city. Consistent with this, the share of those employed in inner London working in professional scientific, research, engineering and technology jobs has fallen since 2011, hurting the capital's productivity. The housing affordability crisis is an economic as well as a social problem.
This article was published by Planning and Building Control Today on July 6, 2016
Link to article here
Related links
Christian Hilber webpage
Urban Programme webpage
Christian Hilber CEP Publications webpage