LSE London Density Debate
Presentation
by
Christine Whitehead, LSE London
June 19th 2006
LSE, London
Will it work? - three issues
• Planning versus actual densities
• Implications for effective use of the
stock, prices and affordability
• Alternative and complementary
approaches to optimising densities
Planning versus actual densities
• Estimates of income elasticity of demand
suggest that in a buoyant economy people
will want more space – both inside and out –
and be prepared to pay for it
• In market housing actual densities are likely
to be lower than planned (while those in
affordable housing start high and go low)
• Relative values of urban open space versus
space at the margin of the urban area
suggest that inner urban space generates
higher value (and values)
Implications
• Although output levels have been rising in London
the total quantity of living space added may well
actually be falling
• Flats have higher vacancy rates and higher turnover
– so less utilisation (some evidence on much higher
vacancies given to Select Committee) - partly
investment; partly household type; partly desirability?
• Relative prices of flats and houses as well as new v
older units changing quite rapidly – concern about
potential residualisation and maintaining mixed
communities
• Flats, especially higher rise flats, have higher service
charges and require more management, increasing
longer term risks
What is Needed?
• If the reasons for encouraging higher
densities are social costs need to address
problems with the existing stock and
households – increase the costs of space to
reflect these externalities
• Similarly if it is infrastructure, need to modify
pricing policies to reflect true costs
• Same applies to costs at margin of urban
areas – need for far more sophisticated
policies relating cost to value
Can this be done?
• Problem is that this approach is highly
unpopular politically
– both with respect to greenfield land,
however poor the land actually is; and
– the ‘taxation’ of space through local
government taxation which is likely to hit
older households most heavily
• But current policy is incoherent and
likely to become more costly over time