Glocal housing markets?

I’ve been reading more about the housing crisis. It’s hard not to agree that the private sector may be part of the problem as well as part of the solution. “Shares in housebuilding sector have been amongst the top stock market performers in a period of historically low new housing supply” Discuss.

In a period of historically low borrowing costs, the state could become a developer of some vital social infrastructure (otherwise known as housing).   David McWilliams presents many familiar arguments and uses typical anecdotes

The other day a well-known publican… who runs a number of thriving places told me the housing crisis is now so acute in the city that staff simply can’t work for the wages he is offering. The same story pertains across all service sectors in town. A lack of housing is stifling growth and opportunity.

He points to the rapid growth of renting, the rapid growth of rents, low supply of new housing, the need for large deposits for buyers, intergenerational inequality etc. He goes on to argue that

The key thing to appreciate is that the market acting alone can’t provide decent housing at decent prices for our country…Rightly or wrongly, fixing the housing problem will take massive government intervention.

He suggests another familiar idea to unlock land banks.

…“use it or lose it” scheme, where the land owner has to start building within one year or the site reverts to agricultural use and the State can enforce a compulsory purchase order.

He doesn’t like infrastructure levies

…super-levies are increasing the frontloaded costs of building, the State could help them out…Levies are to pay for roads, drainage and special services…Standard levies are €9,000 per unit…This is crazy and, as these levies are frontloaded, the levies are preventing developers from building, which may explain why so many sites are vacant. The State could again smooth the payment of these levies over years by again deploying the 30 years’ grace the bond market gives any sovereign government. The levies will be paid, but not all at once and not all at the beginning

He then asks in frustration

What is wrong with this country? Why can’t we get the housing market right?

He’s writing about Ireland and, more specifically, Dublin.

I suspect that we tend to be quite parochial in analysing the UK’s housing market issues. I come across similar phenomena when I bump into academics from other countries at conferences – rich foreign buyers in Sydney, capital cities racing ahead of provincial cities in Stockholm and Amsterdam etc. There seems to be a tendency to focus on the weaknesses of our specific planning and political systems rather than the common drivers – globalization, migration, low/negative interest rates, historically low bond yields, growing inequality, privatization, high debt levels, secular stagnation, technological innovation, the rise (and slowdown) of China, agglomeration effects of clustering creative classes, gentrification, (and may as well throw in) financialisation etc. – that are interlinked and being refracted in different ways in different places.  But we’re seeing lots of similar outcomes too.

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