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Housing sense in short supply

Published in Business Spectator (Melbourne), 21 September 2011
http://www.businessspectator.com.au/bs.nsf/Article/British-housing-land-restrictions-Australian-house-pd20110919-LU7TR?OpenDocument

While the rest of the world wonders what the next phase of the GFC will bring; and while the rest of Europe discusses the future of their common currency; the British are pondering an entirely different question: How can they protect the last blades of grass on their small island from being concreted over?

Though it may sound like an exaggeration, a cursory read of British newspapers suggests that even in these times of global economic uncertainty, little else matters as much as reforms of Britain’s antiquated planning regulations. A new National Planning Policy Framework prepared by Chancellor George Osborne will cut more than a thousand pages of regulation into a simple policy document containing a presumption in favour of development.

Before I continue, I should declare an interest. The changes just announced by the British government including the controversial ‘presumption in favour of development’ were first proposed in a report I co-authored for the London think tank Policy Exchange. Incidentally, it was launched in February 2006 by none other than George Osborne MP. Osborne, then shadow chancellor, was very supportive of our ideas but equally aware of the political dynamite they are.

His strategy for building more homes has created strange bedfellows indeed. The National Trust and the left-leaning Guardian newspaper, the Labour Party and the conservative Daily Telegraph: They are all fiercely campaigning against any policy change which could boost development and residential construction.

Bizarrely, the debate is happening at the very moment that Britain is recording its lowest ever post-War building activity. Last year, a mere 103,300 new dwellings were completed in England – half the post-War average. And completions will fall further – between April and June seasonally adjusted housings starts were down 9 per cent on the previous quarter.

England, the green and pleasant land, has so far withstood all attacks from bulldozers, concrete mixers and cranes: According to official statistics, less than 10 per cent of the country is actually developed in some form. A total of 90.1 per cent of the English surface area is classified as green space or water. Of the remaining tenth of England, the largest chunk (4.3 per cent) is neither buildings nor roads – but domestic gardens.

The British are not living on a concreted over island, nor are they currently building much. Yet the political debate about planning reform could hardly be fiercer. This proves that housing and planning issues have long left the sphere of rational discussions. Instead, they reflect a deep-seated British insecurity about space. Bringing about planning reform thus is at least as much a psychological challenge as it is a political one.

If you don’t believe that the British have no rational concept of space, you should read Kate Fox’s book Watching the English – The Hidden Rules of English Behaviour. Fox, who is a social anthropologist, uses good observation and dry humour to understand the traits and quirks of her compatriots. However, the empirical scientist escapes her when she then muses why the English are the way they are. She speculates it could have something to do with geography:

“This is not just an island, but a relatively small, very overcrowded island, and it is not too hard to see how such conditions might produce a reserved, inhibited, privacy-obsessed, territorial, socially wary, uneasy and sometimes obnoxiously anti-social people.”

Small? Maybe. Overcrowded? Definitely not given nine-tenths of the country is untouched by any kind of development. But territorial, socially wary, uneasy and sometimes obnoxiously anti-social? Yes, yes, yes and yes! If you ever find yourself sitting in an empty cinema and the next person entering places himself right beside you, I’ll take any bet he must be an Englishman concerned about saving space.

So obsessed about space have the British become, so worried about surviving on their supposedly overcrowded island, that they are fighting hard to keep Britain the way it is. This goes beyond the ‘nimbyism’ (‘Not in my backyard’) we also know in Australia. The English are actually going ‘banana’, which stands for ‘Build absolutely nothing anywhere near anyone’.

Resisting any new dwellings will certainly keep Britain the way it is – in more than one way. It will not only protect rich country dwellers, the modern-day heirs of Messrs Darcy and Rochester, from the influx of plebeian city folk, but it will also keep British house prices ludicrously expensive.

By providing a constant under-supply of land for development, the British have made housing severely unaffordable for people on ordinary incomes. As the annual Demographia surveys reveal, median households in English cities now have to pay more than five times their annual income for a home. The benchmark for housing affordability is three times.

Houses in Britain are not only ridiculously expensive. They are also ridiculously small. The average size of a newly built dwelling (more often a flat than a house) is a measly 76 square metres. University of Reading economist Alan W Evans once characterised the style of British housing quite appropriately as “rabbit hutches on postage stamps”.

Chancellor George Osborne is therefore right to improve the supply side conditions for housing development. Only by building more homes will Britain solve its housing crisis. In order to build more, planning needs to become simpler. A statutory presumption in favour of development is a first step. However, it says a lot about a country when the departure from a statutory presumption against development is widely interpreted as revolutionary. Compared to Britain’s planning regime, the old Soviet Union was a free market paradise.

It would be tempting to feel smug about Britain’s weird planning debate. However, at least in Australia we have no reason for such complacency. Australia suffers from the same insular mentality as the mother country. Despite Australia’s vast size, there are still enough people who believe that we are over-crowded and new growth exceeds our ‘carrying capacity’. Remember how former NSW premier Bob Carr declared that ‘Sydney is full’? It seems we have inherited our space obsessed, insular mindset from Britain along with their planning system.

On the other hand, Australians pride themselves in being more pragmatic than the British. So what is stopping us from introducing a ‘presumption in favour of development’ into our own planning regulations?

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