The cool new thing among the young and groovy elements of Twitter and the wonkosphere, particularly among what might broadly be called the classical liberal or small-c conservative elements, seems to be a desire to build lots more houses in London and the better parts of the south east. This desire is not merely presented as a good idea, along the lines of a new tax policy or suchlike, but rather a moral imperative.
However, below the break, I shall explain how the bright young YIMBYs (a) go too far, (b) don't go far enough and (c) are not moral crusaders at all. It's a shame, but there you go.
So, let's start with the problem. It's house prices: they are unaffordably high.
Now, before you make the obvious point, yes I know that the prices of various things are unaffordably high - Old Masters, Ferraris, diamond and emerald Mughal spectacles, to name a few. But houses are different (or so the argument goes). The reason that high house prices are a problem is that young people can't buy houses and then settle down, have children and form families. The young are stuck in a seemingly perpetual, precarious, irresponsible extended adolescence, with no stake in the country and no fixity in their lives. With property ownership out of reach, young people rent in flat shares and fritter their money on avocadoes and dating apps (do you pay for dating apps? I don't know. Maybe it's just the dating that costs money) - and in the meantime fall prey to Corbynistas peddling the snake oil of rent controls and the expropriation of landlords.
I should say at the outset that the people saying this sort of thing have a point. There is surely something grotesque about the idea that a sensible young couple in their twenties, people who have done everything right (got their A-levels, went to university, got good jobs in London) and who now want to grow up and become fully-fledged adults with children find themselves laden with student debt and unable to afford even a modest and unremarkable family house. What sort of a country organises itself in that way?
So, yes, I agree. This is all bad. We shouldn't let the Left persuade people that their housing ideas that failed before will succeed this time - we need market solutions - planning laws are too restrictive, we need more homes - etc etc etc. The people coming up with these clever wonkish ideas for making things better have their hearts in the right place, and lots of their proposals are good and will improve things.
But, ultimately, this kind of thinking is not the answer.
I said above that these people go too far and not far enough. Let's start with the "too far" point.
If housing costs are the problem then what does a solution look like? What is the Promised Land that these clever schemes will lead us to?
Well, the New Jerusalem is England's (slighly less) green and pleasant land, but after a reduction in house prices. That's the way these schemes are meant to work: massive increases in supply will mean falls in prices and instead of houses being out of reach they become affordable.
So let's try to work out what kind of falls in house prices we are talking about.
Presumably the desired goal is being able to buy a modest but adequate family home with a household income of, say, £50,000, a mortgage 4x the household income and lifetime savings of £20,000. (Is that two salaries or one? Doesn't matter for present purposes.) So, a family house in the £200-£250,000 range. Sounds fair enough, right?
What do we mean by a "modest but adequate" house? We're not talking about the ridiculously large houses inhabited by childless couples in The Good Life. All we mean is an unexciting Victorian terraced cottage. You know, the sort of thing that was put up by the thousand to house office clerks and the better kind of manual labourer in the late 1800s. And let's be realistic about precisely where these houses are. We're not talking about returning to the days when an academic could buy a house in Hampstead or Primrose Hill. Instead, we're talking one of those down-at-heel parts of London renowned for historically uneasy race relations and dystopian council estates (and, no, not Notting Hill either).
I think this is an example of the sort of thing we are surely talking about. It's a 3 bedroom terraced Victorian cottage in Peckham. Peckham? Only Fools and Horses? Desmond's? Fits the bill perfectly. Not the fanciest part of London. "In need of modernisation", the agent says, but you're young and you can do it up on the weekends!
But the asking price for that house is £975,000. About 4 times our notional family's budget.
What's that? You want a 4 bedroom house for your growing family? Oh, that'll be £1.2m.
I'm not cherry-picking. Think of those other parts of London renowned for being a bit iffy. Tottenham? Well, a 4 bedroom terraced Victorian house would be £1.25m. What about Walthamstow, postcode E17 (as in the popular music combo)? £1.2m for the Victorian 4-bed terraced house and £900k for the 3-bed Victorian terrace. Or Brixton? By now, I think you know the drill: either side of £1m depending on whether you want 3 bedrooms or 4. (Or perhaps £1.375m if you want to live in a very fancy 3 bedroom house next to the railway line in Stockwell.)
So to get from here (£1m houses) to the Promised Land (£250,000 houses) means reducing house prices by, say, 75%. It means a house price apocalypse.
Let's fiddle around with the figures a bit. Let's double our notional family's household income and take it up to £100,000, let's say they can get a mortgage 5x that income and let's say that they have savings of £40,000. That means that they can buy a house for £540,000. (Forget about the fact that that is a more than 90% LTV mortgage. Forget about all the other costs of buying a house or raising a family.) And then let's say that these houses are really worth only £900,000 and the sellers are just asking for more. £540,000 is 60% of £900,000, so we can get to a mere 40% drop in house prices.
I'm afraid we are still in house price apocalypse territory. Is there a physically feasible plan that could increase the number of family homes within commuting distance of central London sufficiently to reduce house prices by 40-75%? And even if there were, is it politically feasible? Really?
I'll concentrate on the political impossibility. Just think of the sellers of these houses in Peckham and Walstamstow and so on. Think of the elderly widow who lives alone, who bought her house for a song (but it was still a stretch for her and her husband) back in the day, who now wants to cash in the nest egg and go to see her grandchildren in Australia. You're going to take hundreds of thousands of pounds off her? And what about her next-door neighbours, the professional couple in their late 30s who have finally managed to scrape together the money to buy a family house - you're going to push them into negative equity for the rest of their lives? And what about everyone on the north London dinner party circuit? And the stockbroker belt?
Ah, but they are going to be compensated, the YIMBYs say. "By giving local residents control over the development they see, including its architecture and design, and by giving them a share in the wealth created, the paper shows how we can create more beautiful, walkable, and sustainable neighbourhoods, delivering millions of houses in the areas they are most needed," says Policy Exchange, for example, adding that "On streets that agree to allow typical forms of gentle intensification, the average participating homeowner would make £900,000".
Uh-uh. Just think it through for a moment. You can have a local scheme that results in some new houses being built. We've seen it before: the old Docklands, for example, and now Nine Elms and Battersea Power Station. But that kind of development does not result in affordable homes: it results in a number of £1m studio flats. If you are taking a surburban street or some old warehouses, knocking it all down and building Far East Mega City-style luxury skyscrapers then you can, in theory, compensate the original residents. The economics work out and there's nothing wrong with the idea (I love Singapore! I love Seoul!).
But that's not the point of this exercise: that's just fiddling while Rome burns unaffordable. The point of the exercise is to end up with new, reasonably-sized family homes that sell for a few hundred thousand pounds. And that only makes sense if that is also the clearing price for equivalent existing family homes - because otherwise why would the developers sell these new houses (which they have built to the latest zero-carbon and all the rest of it housing standards) for such low prices? - and that means that that will have to be clearing price for all of the existing housing stock in Peckham, Walthamstow, Brixton, Tottenham and so on, leaving aside the knock-on effects on Hampstead, Muswell Hill, Wimbledon and Dulwich. Those kind of capital losses can't be compensated by a few developers chipping in some of their gains from obtaining planning permission.
It's just not going to happen. Nor, frankly, should it - but I'll come back to that.
So, if that's your plan, you're going too far. The logical end point is a housing price crash of astronomical proportions. And if you think the banks would be lending 90% mortgages on 5x salary after that then, as the estate agents would say, situated in much sought-after Brooklyn is this charming family-sized bridge I have to sell you.
So that's the "too far". What about the "not far enough"?
Let's imagine that, by luck or good judgment, we have triggered the house price apocalypse and you could pick up decent houses in zone 2 for a few hundred thousand pounds. Would that resolve the malaise at the heart of society? Would that return us to the prelapsarian days of 1950s nuclear families started by men of 25 and women of 23, the world of three smartly-dressed children, a shiny family car and the occasional foreign holiday?
No.
You've probably seen graphs like these:
As you can see, the 'expensive' countries (UK and France) have been having more children than the 'cheap' countries (Germany, Italy, Japan). I'm not going to say there is an inverse relationship between house prices and family formation. I'm just going to make the obvious point that across all the rich countries of the world, and many of the less-rich countries, there has been a massive decline in family formation and overall fertility, regardless of the very different property / housing markets in these countries. Germans rent and Berlin is cheap, while Brits love to buy and London is ludicrously expensive. Singapore is small and crowded, while the US and Canada are huge and full of empty space. Switzerland is rich and Greece is not. Poland is full of Catholics, but they're hard to come by in Norway. None of it matters. People don't want to settle down and have children.
What would happen if we inflicted the house price apocalypse on the UK? From a quick eyeball of these graphs, we would return prices to where they were in 1995 or 2000. Maybe that would cause a brief uptick to family formation. (Or maybe it would cause such widespread wailing and gnashing of teeth that the 20-something YIMBYs wouldn't be in the mood to celebrate their triumph.) But British fertility rates were no better in 1995 or 2000 than they are today. There is no reason to suppose that, once people got used to the new low house prices of the post-apocalyptic landscape, they would settle down and reproduce at any more than 1995 or 2000 levels.
Of course, some people do settle down and have children. Famously, immigrants manage to do so, despite the fact that they are far from their families, far from their support networks, burdened by difficulties of language and unfamiliarity with the systems of their host countries - and also burdened by the housing costs of England, which are (typically) vastly above those they were used to in their own childhood. (At least the British Bank of Mum and Dad is backed by some successful property investments: not so the Foreign Bank of Mum and Dad). They do so because they want to, and so do some natives.
But the plain fact is that, even when we leave aside unusual people, family life is much less attractive relative to the readily available alternatives in mainstream native culture than it once was, in a huge number of respects that I surely don't need to spell out. In particular, working life is generally better - particularly for women - than it used to be. The entertainment options are much better too. On the other hand, bringing up children is more expensive and more onerous for the well-meaning middle-class parent than it used to be. (Some research shows that men, despite also working, spend more time looking after children nowadays than non-working housewives did in the 1960s.)
The social and financial cost of going from being a non-parent to being a parent is much, much higher than it used to be. House prices are part of that, but only a small part. Frankly, if you gave the young people of today a 6 bedroom Georgian rectory in zone 1 with half an acre of garden and a summer house each, there's not many more of them who would use it to play Happy Families than have already crammed their families into the houses and flats they can afford.
So that's the "not far enough": you could bring about the house price apocalypse, bankrupt the recent purchasers of Victorian terraces and ruin the retirements of millions of Boomers, but you would still not achieve what you set out to achieve in the first place.
The fact that professional and social life is better in so many ways for young people now brings me to my final point. Many of these YIMBYs seem to feel that their desire for affordable housing is a moral crusade - that the Boomers are hoarding land and housing to their detriment, and that redistribution would be justified. To be fair, many Boomers also think that they had it easy in many ways, especially if they are university graduates who attended grammar schools: they had excellent free education, easy access to the professions, and affordable housing.
But the reason that the avocado comes up in these discussions is not really because of its cost, but rather because it is a visible symbol of all the things that the Boomers did not have and the Millennials do: a dozen varieties of olive oil in every supermarket and asparagus all year round; high-quality casual dining, coffee shops, sourdough and craft beer; sushi bars; disposable fashion with no-quibble returns policies; massive flatscreen TVs with all the best films ever made available at your fingertips; the internet, mobile phones and all the other stuff that gets called 'tech'; flights to Australia, cheap flights to Prague and regular trains to Paris; very light bikes; LEDs; casual clothes in the workplace; clean air everywhere; widespread acceptance of all number of minority ethnicities and sexual tastes; indoor crazy golf; recreational axe-throwing; wine and opera without pretensions; burgers and water with pretensions; electric cars; and so on and so on.
And it will only get better (even if global warming does its worst): the Boomers have good medicine, for example, but you can imagine how much better it will be when Millennials get old; and just think of the space travel opportunities about to open up, just a little too late for the Boomers to take advantage of them.
Where, therefore, is the great moral crusade in taking the most fortunate generation in the history of mankind and giving them yet more benefits? Why should they get easy access to the ownership of property in the nicest and best parts of the world on top of all the other lovely things they have? And why should some old and tired people who will, over the course of their lives, have had less of the wondrous things that the Earth and its creative inhabitants can provide, pay for them to do so?
In short, the desire for lower house prices is a literal First World Worry that should not cause you play anything bigger than a very small violin. Much as I warm to the pleasant young YIMBYs who propound these cunning schemes for building more houses - they really do seem to be nice, clean-cut, decent folk - I can't in all conscience ask you to regard them as either entirely sensible or virtuous. But I'm sure that is just the folly of youth. We all did silly things when we were young.
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