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U.K. to Expand Urban-Growth Boundaries

Jan 6


Gordon Brown, the U.K. prime minister, is preparing to order local governments to expand the amount of land available for development so as to alleviate that nation’s high housing prices. Although the media presents this as a conflict between “the environment” and affordable housing, it is in fact a conflict between an elite’s desire to preserve rural open space vs. a working-class desire for decent housing.

Wendell Cox’s survey of housing prices found that the U.K. had some of the least-affordable housing in the English-speaking world. Unlike Canada and the U.S., which both have some unaffordable areas and others that are affordable, virtually all of the U.K. is unaffordable.

Urban-growth boundaries can trace their origin to Queen Elizabeth I, who in 1580 ordered her people to “desist and forbear” any new construction within three miles of the gates of London. The U.K.’s Town & Country Planning Act of 1947, probably qualifies as the world’s first modern smart-growth law.

Click to download Matthew Taylor’s report on rural housing affordability in the U.K.

A 2006 report by an economist with the Bank of England properly blamed the U.K.’s high housing prices on this and similar restrictive laws, which led Tony Blair to talk about expanding the land available for housing. But it took a July 2008 report by member of Parliament Matthew Taylor to lead Brown (Blair’s replacement) to take action. Taylor’s view is that unaffordable housing is threatening rural economies and that relaxing land-use controls will help revitalize those economies.

Interestingly, Brown is head of the Labour Party, which is roughly equivalent to the U.S. Democratic Party, while Taylor is a member of the Liberal Party, which would be roughly equivalent to Teddy Roosevelt’s Progressive Party if it still existed. The fact that both of these left-leaning parties have decided to put housing affordability ahead of “the environment” shows just how out of control U.K. housing prices have become. Yet, as Cox’s survey shows, prices in coastal California and Hawaii are less affordable than even the least-affordable cities in the U.K.

It is also interesting that the U.K. is expanding housing at a time when housing prices are falling and some people are calling for government to rescue the economy by propping up those prices. The problem is that restrictive land-use planning not only makes housing less affordable, it makes prices more volatile. As two British economists showed in 2005, “By ignoring the role of supply in determining house prices,planners have created a system that has led not only to higher house prices but also a highly volatile housing market.”

“Every demand swing will translate directly into a big price swing,” the economists add. “Therefore, the overall volatility of the house market is largely due to the planning system, but a highly volatile housing market with all the insecurity this creates is probably the last thing that either buyers or sellers would like to see.”

Since prices are already falling, there may be no better time for the government to relax its controls. Americans are not mesmerized by the rhetoric of planning can only hope that this sensible idea makes its way to the U.S.

Reprinted from The Antiplanner