Our homes shape and shelter the way we think, feel and behave towards our families and to others. The way we house ourselves should ensure our most basic sense of security. But to talk about housing in 2015 is to talk about human, commercial and political insecurity.
The forces at play are conflicting, and apparently implacable. London and New York, the ultimate world-class cities, are suffering world-class housing crises – which was the subject of my lecture to the Benjamin Franklin Society’s annual symposium at the British Library on 28 September.
The housing crises in London and New York don’t apply to shrewd housing investors or savvy developers; but they do apply to millions of ordinary people, and households with average incomes.
The housing situation in London and New York is essentially the product of significant and persistent shortages of ordinary, genuinely affordable private-sector or social housing, and the stark inability of most people to afford mortgages or rents in many parts of these cities. The unique financial and political security of London and New York, with a combined GDP of about $2.5tn (£1.6tn), is a bedrock factor. Why wouldn’t you invest, strategically, in housing in these places if you had the money?
For most people, it’s a big if. Average house prices across the boroughs of New York are now about $400,000. In Manhattan, the average apartment price reached $1.7m in 2014. In London in 2006, the average asking price for a two-bedroom house was £330,000. Today it approaches £700,000, which is more than 10 times the average annual earnings of a Londoner. A new graduate, earning an average of £22,500, will pay about one-third of that on rent – in outer London.
Turning in particular to London, Peter Rees, the former planning supremo of the City of London, says residential development is four to six times more profitable than building offices. But it produces residential buildings that he describes as “piles of safe deposit boxes… many of dubious architectural quality, sold off-plan to the world’s uber rich”.
London’s overheated housing market is exacerbated by a stream of conflicting factors that need to be addressed in a committed way. These include the lack of effective political leadership and fudging over land use, long-term land-banking, planning and private rental sector regulations, so-called affordable housing policies, and the steady erosion of housing association activity.
The provision of housing is being driven by a market economy that has overwhelmed the social market ideas that produced substantial tracts of affordable and local authority housing in London in the 20th century.
The allure of the Yellow Brick Road to endless I’m All Right Jack gentrification seems commercially and politically irresistible.
In a letter to Bishop Mandell Creighton in 1887, the historian and moralist, Lord Acton, said: “The issue which has swept down the centuries and which will have to be fought sooner or later, is the people versus the banks.” For most housing seekers in London, the issue today might seem to be housing policy-makers and providers versus the people.
It’s not that simple, of course, but this perception is getting stronger – and it is generating some very uncomfortable human and political ramifications. In terms of housing, who are London and New York world class for?
John McAslan is executive chairman, John McAslan + Partners
