Christian Nygaard

Local Housing Supply and the Impact of History and Geography

This paper considers the impact of existing land use patterns on housing supply price elasticities in local areas of England, under existing planning policies. The paper demonstrates that, despite common national planning policies, local supply responses to market pressures vary considerably, because of differences in historical land uses. The study area covers the Thames Gateway and Thames Valley, which lie to the east and west of London respectively. However, whereas the latter is one of the wealthiest areas of England, the former includes some of the highest pockets of deprivation and was a government priority area for increasing housing supply. Due to differences in historical land use and geography, the price elasticity in the least constrained area is approximately six times higher than the most constrained.

International Migration, Housing Demand and Access to Homeownership in the UK

Since the mid 1980s, the UK has experienced a prolonged period of net international migration with debate as to its impact on economic benefits and costs. A third of projected new households in the next 15–20 years are expected to come from net migration. This article examines international migration and housing demand in light of the conventional understanding of British housing markets and the extent to which there are differences in demand and access to homeownership across international migrant groups. Demographic and socioeconomic factors as well as length of residence are found to be significant determinants of homeownership. However, there are also differences in homeownership attainment that may be related to ethno-cultural differences or unobserved wealth effects and mortgage market institutional factors. The role of socioeconomic factors has implications for skills-based migration to the UK if a policy concern is house price pressure and migration.

Transfers, contracts and regulation: a new institutional economics perspective on the changing provision of social housing in Britain

Social housing policy in the UK mirrors wider processes associated with shifts in broad welfare regimes. Social housing has moved from dominance by state housing provision to the funding of new investment through voluntary sector housing associations to what is now a greater focus on the regulation and private financing of these not-for-profit bodies. If these trends run their course, we are likely to see a range of not-for-profit bodies providing non-market housing in a highly regulated quasi-market. This paper examines these issues through the lens of new institutional economics, which it is believed can provide important insights into the fundamental contractual and regulatory relationships that are coming to dominate social housing from the perspective of the key actors in the sector (not-for-profit housing organisations, their tenants, private lenders and the regulatory state). The paper draws on evidence recently collected from a study evaluating more than 100 stock transfer organisations that inherited ex-public housing in Scotland, including 12 detailed case studies. The paper concludes that social housing stakeholders need to be aware of the risks (and their management) faced across the sector and that the state needs to have clear objectives for social housing and coherent policy instruments to achieve those ends.

The Impact of Buy to Let Residential Investment on Local Housing Markets: Evidence from Glasgow, Scotland

ABSTRACT The advent of the ‘buy to let’ (BTL) phenomenon in the UK, apart from producing a new wave of individualized rental market investment, has been widely judged to be a speculative and destabilizing force in the housing market. This paper provides a detailed empirical investigation of new residential investment in one city (Glasgow) where BTL has made a relatively large impact. In seeking to overcome data problems, the study employed qualitative (expert interviews and a landlord survey) and quantitative methods (census, the Register of Sasines, standardized house price information and modelling thereof) in order to assess the nature and scale of BTL, the motivations of investors and its impact on the private housing market. The evidence suggests that while Glasgow is in many respects different to rental markets elsewhere in the UK and although the investment has thus far largely occurred in a benign environment, the context for future investment, on balance, looks sustainable (i.e. favourable changes to pension planning law and the maturing market for BTL). Long-term market impact is an empirical question that depends on the specific interactions of market niches or segments (i.e. the first-time buyer market for apartments) with potential buy to let investment. Our conclusion, to borrow a Scottish legal term, is that BTL induced volatility is ‘not proven’.

The Causes of Long-Term Neighbourhood Change

This chapter is concerned with understanding why urban structures arise, persist and change, with a specific focus on long term neighbourhood change. It is argued that typically, neighbourhoods exhibit persistence in social structures over very long periods of time. Relative spatial patterns of wealth and poverty within cities can remain broadly unchanged for decades if not centuries. Analysing long term neighbourhood change is challenging as long term time series are not easily available. The chapter starts with a discussion of initial urban population distributions and argues that geography and geology are crucial in understanding these early distributions. Once initial social patterns become established, they become locked in by the history of development. Path dependence in the development of neighbourhoods may arise not only from the underlying geology, but also because of the longevity of the housing stock, which creates a ‘spatial lock-in’. Next, the chapter deals with the questions whether spatial structures persist over time and the extent to which structures change in response to external shocks. The authors conclude that these shocks occur irregularly and have to be very substantial to have any lasting impact.

Ownership Transfer of Social Housing in the UK: A Property Rights Approach

Retrenchment of the public sector as a direct provider of rented accommodation has been accompanied by a growing reliance on housing associations as alternative providers of below‐market rented accommodation in the UK. The most successful vehicle to date (in terms of transferred ownership of units) for growing the not‐for‐profit sector has been so‐called “large‐scale voluntary transfer” of dwellings formerly owned by local authorities. Since the turn of the century this has been accompanied by the rapid expansion of “arms‐length management organizations” in England. Notably though, for a process concerned with the transfer of legal entitlements to property, the literature on stock transfer and social housing reform is marked by a curious absence of any discussion of a property rights dimension of this process and, particularly, how degree and form of ownership is capitalized through the prevailing (and changing) governance structures. The point of departure for this article is an examination of how stock transfer separates ownership over social housing attributes and the relative valuation of property rights. We argue that stock transfer involves the de jure transfer of property to a new legal entity, but that a significant part of de facto property rights remain “un‐transferred”, or have been redistributed within the public sector and thus do not necessarily constitute a redrawing of the public domain boundary.

The Political Economy of Social Housing Reform—A Framework for Considering Decentralised Ownership, Management and Service Delivery in Australia

Several State Housing Authorities in Australia are currently examining models of devolved management and ownership of social housing stock and addressing reduced Commonwealth State Housing Agreement funding (or have already done so). These changes in the provision and mode of below-market accommodation are reflective of two broad trends: firstly, a greater reliance on market and not-for-profit provision of public services; and, secondly, a change in the role and mode of bureaucratic intervention at various levels of government. In this article we illustrate a framework for analysing these changes by focusing on the transfer of some 86 000 properties from the Glasgow City Council to the Glasgow Housing Association (GHA) in 2003 and also provide an interpretation of how the restructuring of social housing in the UK reflects the political economy of property rights, and the governance and incentive structure through which the restructuring of advanced economies is implemented. We conclude by briefly drawing implications from the British case for Australia. The analysis is conducted in a new institutional tradition that assesses property rights and the provision of social housing, and associated policy goals, under comparative institutional arrangements or governance structures. We argue that stock transfer in essence is a policy of delineating ownership of different attributes of the housing stock and that such a delineation is crucial to the functioning of the emerging governance structure and the ability of stakeholders to extract value from ownership. We draw on a series of interviews conducted by the authors as part of research into the 2003 GHA transfer. These interviews were conducted with policy makers and politicians (past and present), the regulator in Scotland, GHA staff and representatives of the community-based housing association sector in Glasgow.

The distribution of London residential property prices and the role of spatial lock-in

Much of mainstream economic analysis assumes that markets adjust smoothly, through prices, to changes in economic conditions. However, this is not necessarily the case for local housing markets, whose spatial structures may exhibit persistence, so that conditions may not be those most suited to the requirements of modern-day living. Persistence can arise from the existence of transaction costs. The paper tests the proposition that housing markets in Inner London exhibit a degree of path dependence, through the construction of a three-equation model, and examines the impact of variables constructed for the 19th and early 20th centuries on modern house prices. These include 19th-century social structures, slum clearance programmes and the 1908 underground network. Each is found to be significant. The tests require the construction of novel historical datasets, which are also described in the paper.

Building Our Way Out of Trouble

This chapter turns to an issue that remains at the forefront of policy today—housing supply—but set in a long-run framework. Public sector involvement in the provision of housing expanded after the Great War, but the proportion of GDP devoted to housing has exhibited little evidence of an upward trend since then. High levels of building have rarely consistently taken place, except following times of national emergency or when the wider economy was in recession. Controversially, this raises the question of whether the building industry would respond fully to the commonly-acknowledged current major housing shortages, even if planning controls were to be relaxed. This national level analysis is complemented by local London analysis and considers the relationship between building and rail and underground developments in the nineteenth and early twentieth centuries. Rail construction had a major impact on population outflows from cities towards the suburbs.

Long-run urban dynamics: understanding local housing market change in London

Abstract Recently, a literature has emerged using empirical techniques to study the evolution of international cities over many centuries; however, few studies examine long-run change within cities. Conventional models and concepts are not always appropriate and data issues make long-run neighbourhood analysis particularly problematic. This paper addresses some of these points. First, it discusses why the analysis of long-run urban change is important for modern urban policy and considers the most important concepts. Second, it constructs a novel data set at the micro level, which allows consistent comparisons of London neighbourhoods in 1881 and 2001. Third, the paper models some of the key factors that affected long-run change, including the role of housing. There is evidence that the relative social positions of local urban areas persist over time but, nevertheless, at fine spatial scales, local areas still exhibit change, arising from aggregate population dynamics, from advances in technology, and also from the effects of shocks, such as wars. In general, where small areas are considered, long-run changes are likely to be greater, because individuals are more mobile over short than long distances. Finally, the paper considers the implications for policy.