Posted by: aboutalbion | December 7, 2012

Housing crisis … ?

I have been amazed that there is a building plot of land (for one house) in a mature suburban area not far from my house [in the middle part of England] that is on the market at an asking price equivalent of over £3M per acre.

To me, this is a reminder that the UK has a housing crisis that is so large that no politician will talk about it in a realistic way.  It is also a crisis that is very difficult to analyse.  Tolstoy’s quotation, “solving the land question means the solving of all social questions”, promises too much.

One way to begin to describe the UK’s housing crisis is to note the ratio of bare land values to residential land values.  I read that current bare (agricultural) land values are (on the average) around £6000 per acre.  From a web search, I estimate that residential land values are somewhere between around £400,000 and around £1.6M per acre (depending upon location) – except in central London (and the plot in my neighbourhood) where the values are much higher.

These ratios (1:65 and upwards) represent the social pressure difference that is the housing distress for many.  I see this on the few occasions that I fly over the UK.  I see a lot of agricultural land punctuated here and there by villages, towns, and cities.  From above, those who do not work the land really do look as if they live in small, medium, and large concentration camps.

I hear the voices that say the abundance of land in the UK needs to be arranged like this in order to feed our population efficiently.  However, at the same time as having an abundance of land, the UK also has a shortage of housing generally, and a shortage of affordable housing in particular.

UK politicians stress the value of being ‘in work’.  But how can those ‘in work’ work effectively if they have well-founded concerns about the availability of suitable housing and its cost.

If the UK housing market was something like a normal market, then excessive demand for housing would lead to new providers of housing entering the market.  To me, it is conceivable that the dysfunctionality of the housing market, and its consequent choking of social mobility, and the inexplicable absence of housing from serious political discourse, will lead to social unrest.

I recall that the western world economic crisis of 2006/7/8 developed after the collapse of a housing bubble in the US.  I am wondering if the UK economy can be ‘rebalanced’, and pronounced ‘healthy’ again, without Government intervention in (and some regulation of) the housing market.


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