The economics of supply and demand is a fickle friend to urban planners everywhere.
Say you work in a city with traffic jams, and the council decides to increase road capacity. In the short run, productivity improves, as getting about the city becomes easier. But in the long run, the demand for roads increases as travelling by car becomes a more viable option for an increased number of commuters.
Previously, these commuters might have taken public transport, or chosen not to travel. However, now that road capacity is greater, they are compelled to drive.
This results in a return to the status quo of traffic jams, just on bigger roads. This phenomenon is ubiquitous in American cities such as Los Angeles, where public transport plays second fiddle to private.
The same is true for housing. When demand for housing is high, but supply is low, common sense would dictate that housing supply ought to be increased in the areas where demand is greatest. However, in the long run, much like on an American highway, housing demand will increase once more – because the area where demand is greatest is perceived as more affordable than before.
Brits who might otherwise resign themselves to a semi in Luton might jump at the chance to own property in London if it was presented as being affordable. People change their habits in response to economic signals.
This is what economists call “animal spirits”. Consumers are more confident that they can buy that house, or drive that car, even when the prices have hardly changed, simply because an announced change in supply triggers changes in consumer behaviour.
In fact, we British ought to know this. After the Second World War, the United Kingdom experienced an unprecedented increase in house building.
Metro-Land, part of the vast surge of housebuilding in the 20th century. Image: Cyril A Wilkinson.
Annoyingly, this didn’t lead to any long-term mitigation of the absurd house prices that we face today. The demand for housing in London and the South East is so great that, even after paving over most of Middlesex, we still couldn’t make London affordable in the long run.
And yet, here we are, again discussing paving something over. This time, the mildly inaccurately titled green belt is in the iron sights of house hunters.
Fair enough – demand in London is reaching a fever pitch, the supply of housing has been out of step for decades, and the Tories are quite rightly afraid that young people’s inability to get on the property ladder is haemorrhaging their poll ratings among the under-40s.
This seems like a reasonable idea. Parts of the green belt are hardly that green, we don’t need to use up that much of it, and large swathes of green belt are currently located within reach of a Tube station.
Yet with that admission, the problem becomes clear: green belts are not created equal. “Loosening the green belt” is so often just a turn of phrase for removing the Metropolitan Green Belt (the one that surrounds London), because it is under the greatest duress.
Although other green belts were considered important at the time of their implementation, they do not command the same gravitas and controversy afforded by London’s own.
However, a policy to loosen London’s belt alone could be construed as unfair and partisan. Therefore, such a policy would probably invoke green belts across the United Kingdom. How would different green belts be affected?
Railway line extensions into Middlesex led to huge levels of home-building. Image: Metropolitan Railway.
The Metropolitan Green Belt would clearly experience a high level of development as soon as possible, as relatively cheap sites became available in boroughs such as Barnet and Bromley.
This would result in increased economic activity in these areas, due to greater population density. At this point, animal spirits come into play. A greater population density in and around London would cement the South East’s position as the economic centre of the United Kingdom.
Therefore, the demand for housing in the South East would once again increase over time. This means that any serious reduction in prices promised by a loosening of the green belt would likely be less than expected.
Comparatively, a loosening of the green belt in other parts of the United Kingdom, while potentially valuable, would hardly touch the levels of population growth and boosted economic activity experienced around the capital. It could be argued that initiatives such as HS2 and the long-term development of KIBs (Knowledge Intensive Business Services) could improve the situation across the United Kingdom, but these initiatives are only designed for the Birmingham and Manchester-type cities of today – rather than the grander cities that a loosening of the green belt presupposes.
So: loosening the green belt is an inherently London-centric proposal. Just because demand is greatest in the capital, that does not mean that freeing up housing supply is the best blanket policy for solving structural housing issues across the entire country, especially when we admit that solving said structural issues is rather difficult.
Workers have been migrating across the North-South divide for centuries, moving to where they believe the best employment opportunities reside, wilfully abandoning their homes in the belief that the grass is greener in the South.
Opening up the green belt for development now would encourage that mentality, while depriving northern cities of a chance to develop themselves into true regional powerhouses where people want to stay and work. That chance should surely come first.
If we want to increase opportunities for growth in London, we need to make sure that the same opportunities exist across the United Kingdom. Otherwise, we risk perpetuating centuries-old geographical inequalities into the future, simply by opening up the green belt. Those aren’t the values that ‘London Is Open’ stands for.
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