Published by Policy Exchange (London), September 2005 (PDF)
This new report from Policy Exchange shows that in countries where local councils have to “compete for every inhabitant” they successfully plan for better and cheaper homes in sustainable, green communities.
Following the success of Unaffordable Housing – Fables and Myths, which exposed the failings of Britain’s centrally planned system of development, Alan W. Evans and Oliver Marc Hartwich went on a journey in search of alternatives.
Interviewing planners, politicians, real estate agents and academics in four countries – Germany, Switzerland, Ireland and Australia – they uncovered how other countries succeed, and sometimes fail, to give people the housing they want.
In their second report on housing and planning, Evans and Hartwich show how localised fiscal and planning regimes in
Germany and Switzerland have produced large, affordable homes in green cities. By contrast, they find that the centralised
planning systems in Ireland and Australia have led to skyrocketing house prices and restrictions on spacious living. The result of their research is Bigger Better Faster More – Why Some Countries Plan Better Than Others.
- Age of dwelling stock– 38.5 per cent of homes in the UK were built before 1945, compared with just 27.2 per cent in Germany and 17.9 per cent in Ireland.
- Average new dwelling size – the UK and Ireland are building small new homes at just 76 m2 and 87.7 m2 respectively,compared to 109 m2 in Germany and 205.7 m2 in Australia.
- House prices– over a period of more than three decades, real house prices in Ireland, Australia and the UK went up by around 3 per cent per annum while they remained stable in Germany and Switzerland.
Green and Pleasant Cities: Germany’s Localised Planning System
- Central government grants are linked to population and tax revenues, so local politicians compete to make their cities attractive – both in the sense of pleasant places to live and places that draw more inhabitants.
- The right to develop property you own, subject to conditions developed by all the federal tiers of Government, is enshrined in the constitution.
- The main responsibility for planning lies with local planners and politicians, so plans are responsive to local needs and the environment. Plans are binding and subject to judicial review.
- Germany’s planning system has delivered house price stability, spacious homes and green cities despite a similar population density to the UK.
Competing for Taxpayers: Why Swiss Planners Build What People Want
- Switzerland’s political structure is highly devolved. It allows the cantonal and sub-cantonal tiers of government to determine local tax rates.
- Tax autonomy leads to tax competition between councils and cantons. Providing inadequate land for housing means councils risk losing inhabitants – and therefore tax income – to neighbouring areas. On the other hand, council areas attracting new inhabitants are able to lower their tax rates or improve services.
- There has been virtually no real house price inflation in Switzerland for more than three decades, while at the same time Swiss houses have become bigger and better, allowing more and more Swiss to live in the houses they desire.
Housing the Celtic Tiger: Ireland’s Short-sighted Construction Boom
- Ireland’s housing boom has led to impressive increases in house building, but these came too little and too late to prevent rampant house price inflation.
- Ireland’s unresponsive, centrally planned system of development failed to react to the demand pressures of the economic boom. This later resulted in a ‘quick fix’, with large numbers of small, often low-quality houses on monotonous estates added to the bottom segment of the house market.
- However, the lack of additional housing at the top end of the market means that, as first-time buyers seek to trade up, they find themselves unable to afford better homes for their families.
Death of a Dream: Planners versus the Traditional Australian Home
- The Australian desire to create a home away from ‘home’ (their European roots) has led to a strong cultural preference for spacious houses with big gardens – ‘the Great Australian Dream’.
- Various Australian (state) governments have threatened this dream by reducing the quantity of land released for housing and by levying homebuyers to provide infrastructure. Both policies have had a strong upward impact on Australian house prices.
- In Sydney, 78 per cent of the purchasing price is typically paid for the land, not for house itself. So land-use planning has actually created a shortage of land – in a country with a population density of only 2 persons per square kilometre
Bigger Better Faster More featured on the BBC One Politics Show (15 July 2007)