Urban Studies, Vol. 30, No. 7, 1993 1 129-1149
Controlling the Housing Land Market : Some
Examples from Europe
James Barlow
[Paper first received, July 1991 ; in final form, June 19921
Summary . One major problem for the production of low-cost housing in the UK is the continued
lack of control over the market for housing land, yet there is very little debate about ways of
controlling land prices. This paper assesses some alternative approaches to land-use planning by
focusing on high growth sub-regions in Britain, France and Sweden . It examines the flexibility of
these planning systems to changes in the demand for housing land and the relationship between
land release, land prices and house prices. The paper argues that the British approach is subject
to a high level of uncertainty, exacerbating risk-taking speculative behaviour and price inflation .
Under the French system, development uncertainty is reduced and house prices more rigidly
controlled, with the result that speculative behaviour is constrained . The Swedish system is
dependent on the ability of local authorities to build up land reserves which act as a buffer
against price inflation . However, pressure on land prices in the open market has made this
approach increasingly hard to sustain .
Introduction
Although there is a voluminous literature on
the relationship between the planning system, land supply, land and house prices,
much of the debate founders on definitional
confusions and the extreme simplification of
complicated real-world relationships . In a recent comprehensive survey of the debate,
Monk et al. (1991) argue that this literature
tends to neglect the distinction between land
made available for housing by the planning
system and land defined as available under
economic theory . While it may be possible
for a planning system to impose absolute
control on land supply, supply is not fixed in
the long run because land can be converted
from alternative uses and the amount used in
the production of each dwelling can be increased or decreased . How fixed land supply
ultimately is depends on the way time is
treated in the theory, although `time` is never
actually defined in the literature.
Monk et al. also argue that explanations
which are grounded in `comparative statics',
i.e . the joint determination of land use and
land price, modelled in terms of a trade-off
between job and market accessibility in city
centres and the consumption of space, are
unsatisfactory because they simplify reality
to an extreme degree . Many relationships are
not fully specified and the more actual behaviour is incorporated, the more these
models lose generality and predictive power .
There are major gaps in the ability of comparative statics to handle the relationship
between new and existing house prices,
monopoly landownership, speculative be-
James Barlow is at the Policy Studies Institute, 100 Park Village East, London NW/ 3SR, UK .
1129
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1 130
JAMES BARLOW
haviour, lags, expectations and risk . On the
other hand, the `behavioural' literature is
essentially untheorised, although it has provided useful insights into local variations in
housing and land markets, planning condevelopers' knowledge,
and
straints,
landowners' motives . A third approach, the
`structural' view, emphasises the distributional struggle between landowners and
developers within the context of a changing
framework of housing provision. In the long
run, Monk et al. argue, this approach actually
draws similar conclusions to the comparative
statics position inasmuch that it sees the interrelationship of house prices, building
costs, output and unstable demand as resulting in inflationary pressures .
This assessment of the existing research
has three implications :
(1) It is important to define what is actually
meant by the short and long run, since
the fixity of land supply is likely to be
variable over time .
(2) It is important to take into account differences in the behaviour of landowners
and developers, since non-rational expectations and risk-minimising strategies
clearly play a significant part in the development process.
(3) It is necessary to accept that there are
local variations in the operation of housing and land markets, as these are
spatially bounded and local planning authorities frequently operate with a degree
of autonomy and discretion .
All this suggests that any empirical analysis
needs to be clear about the parameters set by
the structure of housing provision as a whole
and their evolution over time (cf . Ball et al.,
1988) . This evolution does not result in some
long-run equilibrium state (or series of equilibria) . Rather, it takes the form of
continuous change in institutional forms and
state-market relationships . An understanding
of the structure of housing provision also
allows a better integration of speculative
risk-taking behaviour as it emphasises the
strategies of the various parties involved in
the development process .
The objective of this paper is to investigate
some of these issues by using a crossnational comparative approach . Its focus is
on the relationship between the planning system, land supply and land prices, rather than
the long-run relationship between the supply
of new housing and house prices. The aim is
to illustrate some of the potential ways in
which alternative systems of regulating land
supply influence land availability and prices
and illustrate the importance of understanding long- and short-run change in the context
of the wider structure of housing provision .
As an acid test, the performance of three
contrasting planning systems-those of the
UK, France and Sweden-is examined in
high-growth housing and labour market areas . High-growth areas have been chosen
because it is here that the pace of change,
both in housing demand and supply, is dramatic . The process of economic restructuring
often brings new workers into the area rather
than simply re-employing those in existing
jobs, leading to changes in housing demand
which may be disproportionately greater than
the employment growth . The logic for choosing France and Sweden as examples of
different policy frameworks is that these
countries provide highly contrasting approaches to development control and
land-use planning, as the next section shows .
Planning and Development Systems : The
National Framework
Alternative Regulatory Systems
There are major differences in European
planning systems . These shape the ways in
which housing is provided and the competitive strategies of developers and landowners .
The British planning system is perhaps distinguished by the fact that it has become
increasingly politicised in recent years, making it subject to a high degree of uncertainty .
This arises from the fact that developers have
no automatic right of development, as tends
to be the case under a zoning system, while
local authorities have considerable discretion
in the way they operate development control .
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CONTROLLING THE HOUSING LAND MARKET
The implementation of land allocation policies can therefore vary considerably between
authorities . Attempts in the early 1980s to
make the system more flexible for developers
ran up against a growing tide of protest by
residents in some areas, and the latest legislation (the Planning and Compensation Act
1991) moves the system back to `firmer'
planning, possibly heralding greater certainty
in the development process (Mynors, 1991) .
The housebuilding industry has historically had a favoured status in France . The
finance system emphasises investment in
new housing, with a range of reduced interest
loans available to purchasers and investors .
Although conditions limiting household income, dwelling size and house price are
attached to these loans, they have tended to
stimulate new construction . The planning
system also favours new development . While
public consultation during the preparation of
a plan d'occupation du sol (POS) or local
plan is mandatory, there is comparatively
little opportunity for third parties to object to
its content. A POS is only legally required in
communes of over 10 000 inhabitants, although most have adopted local plans
voluntarily . The system of zoning means that
detailed local plans essentially comprise a
legally-binding document containing the
right to develop . However, compared to the
UK the system of local government is highly
fragmented and the decentralisation of political power in 1982 increased the role played
by local mayors in the granting of development permits . Although local conditions
vary, with communes under right-wing control having a reputation for refusing planning
permission for low-cost housing development, the system is such that developers can
be fairly certain of obtaining a building permit providing their scheme fits in with the
zoning requirements . In general, planning
permission is rarely refused ; developers'
plans are simply modified. The zoning requirements are not, in any case, always
crucial to the outcome of a planning application since large areas of the countryside (as
well as urban areas) are left unzoned . Although planning permission only lasts four
1131
years and the POS can change following
local elections (which take place every six
years), development control is potentially
more flexible and responsive to housebuilders' demands than in Britain . In
addition, the Programme d'Action Fonciere
from the mid 1970s to 1984 enabled communes in major conurbations to use
low-interest loans to buy land for their future
development needs .
The key point about the Swedish approach
is that supply of new housing is subject to a
high degree of state control (Duncan, 1989),
(although the Swedish system is now undergoing considerable change following the
election of a Conservative-dominated coalition in 1991) . In effect, a system of
reduced-interest state housebuilding loans
(SHL) precludes speculative housebuilding
on British lines, although this is not to say
that speculative pressures or behaviour are
absent. Under the SHL system, land and
construction costs are subject to controls,
while the `land condition' (markvillkoret)
insulates housing land from the overall land
market. The markvillkoret requires that all
housing built with an SHL-except for
individually-built, one-off, single-family
dwellings and housing built under certain
other special circumstances-must use land
from commune land banks. Nationally,
around 70 per cent of new housing is built on
commune land, although almost all housing
is built with an SHL . Most of the remainder
uses land which, although not owned by
communes, is licensed by them and has similar price/quality parameters .
Developer Strategies
These differences in the way housebuilding
is regulated are partly responsible for shaping the competitive strategies of the development industry (Barlow and King, 1992 ;
Barlow, 1992). It is important to stress that
in many countries the bulk of new housing
is promoted by non-profit or limitedprofit agencies, or by individual households
(`self-promotion'). Speculative development
is relatively rare in France and almost non-
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1 13 2
JAMES BARLOW
existent in Sweden . In Great Britain, however, around 80 per cent of total completions
are now by speculative developers, compared
to 40 per cent in France. Although 90 per
cent of total Swedish housing completions
are built by profit-making construction companies, these firms only promote about 30
per cent of the total . The remainder are built
under contract for co-operatives or commune-controlled housing companies . Almost
all the dwellings promoted by private developers are built with SHLs and hence
speculative strategies are precluded . Selfpromoted housing accounts for around half
the annual output in France and over 20 per
cent of the Swedish output, compared to 5-6
per cent in the UK.
Differences in the way the state intervenes
in the land market, mainly through the planning process and taxation, mean that
housebuilders cannot compete in the same
way in each country . The British system
means that access to land and the ability to
build up landbanks is of paramount importance (Ball, 1983). Housebuilders, attempt to
increase their development profits by maximising the difference between land and
house prices . This does not mean that firms
are simply concerned with land speculation .
Clearly, until housing is built and sold the
development value of the land cannot be
capitalised . However, skills in land purchase
and timing completions to maximise gains
from house price inflation tend to be more
important than the ability to compete through
technical innovation.
In contrast, land plays a rather different
role for developers in France and Sweden .
Although a private land market exists in
Sweden, the SHL system and public
landownership largely preclude the landoriented strategies adopted by British developers . In France, developers are superficially
similar to their British counterparts . However, these firms tend to buy land for their
immediate use, rather than purchasing
longer-term strategic land . This is partly because of relatively low land price inflation (in
most areas) and partly because land holding
taxes are levied if development does not take
place within a certain period after purchase .
However, we should recall that over half the
annual French housebuilding level is 'selfpromoted' . This system is dominated by
specialist builders-who build the housingand lotisseurs, specialist land assembly firms .
The builders do not speculate in the land
market since they are currently forbidden
from owning land (see Barlow, 1992). Since
`playing' the land market is less important
for Swedish and French developers, firms in
these countries have adopted a range of alternative competitive strategies, involving
technical innovation and improvements in
product quality .
Some Implications for Housing Land Supply
The differences in planning mechanisms and
developers' competitive strategies suggest
that the operation of the housing land market
is likely to be rather different in the UK,
France and Sweden . In the UK, the level of
uncertainty in the planning process increases
the risk level for developers, but equally the
lack of fiscal control over an historically
inflationary land market allows them to
achieve potentially high (albeit unstable)
profits. However, because of the historically
high land price inflation and the possibility of
overturning local planning decisions by appeal, landowners' expectations are likely to
be high, resulting in an unwillingness to drop
prices except under the most financially
straightened circumstances . This relationship
between landowners and developers operates
within a framework characterised by a ,higher
degree of local planning discretion than in
some other countries . Hence, the responsiveness of the planning system to increased
demand for land is likely to be variable at the
local level .
The French planning system potentially
affords more certainty for developers, although this is also subject to local variations,
with planning decisions dependent partly on
the political complexion of the specific commune . Nevertheless, the zoning system
means that land supply may be more flexible
in the short term in that it is able to respond
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CONTROLLING THE HOUSING LAND MARKET
to immediate changes in the demand for
development land . Taxation of land holding
and lower rates of inflation mean, however,
that landowners and developers have lower
expectations and developers tend to adopt a
less land-oriented competitive strategy than
their British counterparts .
The Swedish system stands in complete
contrast to those of the UK and France. Here,
local authorities play a major role in the land
market, buying open market land at preemption prices for their land banks. The bulk
of housing development occurs on this land .
The scope for speculative activity by
landowners and developers is therefore limited. In short, the parameters of the land
supply and demand equation are shaped by
the operations of local authorities in the land
market. This means that there is potentially a
closer match between supply and housing
need, since local authorities can release land
for development according to the requirements of their local housing plans . However,
this is likely to depend on the extent of the
public landbank in a given commune and
local political attitudes to development . Furthermore, it is quite possible (as developers
argue) that while housing needs are fulfilled
by this system, some effective housing demand is being excluded and more dwellings
could be brought to the market in the absence
of such controls .
Do these differences in regulatory form
also imply differences in flexibility over
time? The British system of structure and
local planning is heavily reliant on the ability
of local authorities to identify land requirements for a number of years in advance ;
hence it is subject to competing claims over
the likely rate of population and employment
growth and the definition of suitable housing
land. In the short run, the system may be
sufficiently flexible to respond to immediate
demands for land, providing this land has
already been identified as suitable . However,
during the 1980s, the system increasingly ran
up against disputes over the best techniques
for forecasting land requirements (see
Hooper et al., 1989), as well as anti-development pressure from local residents' groups .
1133
The longei-term evolution of the planning
system over the 1980s may have therefore
removed some of its flexibility as it became
increasingly exposed to competing political
forces.
Although the POS system requires French
communes to identify future land availability, zoning offers a more immediate response
to the changing demand for land because of
the embodied right to develop and lack of
third party protest rights . This is not to suggest that local political battles over land
availability do not occur (especially in areas
of development pressure) and that there has
not been lobbying by developers at a national
level . Rather, the French approach implies a
more immediate, short-term flexibility .
The Swedish system is altogether different . Here, control over housing land markets
is geared towards the fulfilment of housing
needs rather than the demand for land from
developers. Essentially, the housing system
is insulated from market forces to a greater
degree than in the UK or France. This makes
the concept of `effective demand' for housing less meaningful than in those countries .
While Swedish developers argue that the potential demand for owner-occupier houses is
not being effectively met, the altogether
different approach to housing provision
undermines the premises on which this argument is based . Distinctions between short
and long run flexibility are therefore less
valid than in other countries .
In order to capture the effects of changing
demand for housebuilding land, this paper
examines the housing and land markets of
the case-study areas during the 1980s . This
was an important period in all three countries
because the property sector in each was subject to a complete boom and slump cycle (to
a greater or lesser degree) . As argued above,
in the long run, even under under stringent
planning conditions, land supply is responsive to changing demand . Pressure to
increase land supply is often exerted through
lobbying of central government, ar14 the
planning system is subjected to long-term
evolution . This was the case in the UK in the
early 1980s and in France in mid 1980s, and
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1 13 4
JAMES BARLOW
has been the case in Sweden since the late several sources . There is only limited information on land prices in the Paris case-study
1980s.
However, the long run at a `macro' or area, and the data were based on studies for
`national' scale may be irrelevant when deal- the ddpartement of Essonne (Vilmin, 1987),
ing with local labour/housing market areas . interviews with developers and data provided
This is because land and dwellings are essen- by the Direction Department de L'Equipetially non-substitutable at this scale since ment. Toulouse is much better researched
housing demand is largely expressed within and the AUAT (Agence d'Urbanisme de
specific local labour/housing markets . In ad- l' Agglom-eration Toulousaine) provides a
dition, smaller areas tend to be more subject time series for different types of housing land
to `local' political and economic factors for the metropolitan area (see Figure 1) .
while national indicators tend to smooth over
One problem with comparing housing land
local variations . This is important in the case price statistics is the basis on which they are
of land supply, since local lobbying for and collected. In the UK, the DoE figures are for
against development is likely to be more a hectare of land sold for all forms of housextreme-it is easier to organise ; local gov- ing development, including apartments (the
ernment and the local political framework is limited amount of apartment construction in
more prone to pressure from special-interest the UK means that we can discount the effect
groups'-hence there is a greater impact on of this on average land prices). The French
land supply than at the national level . data are separated into land for self-promoted
Finally, the importance of the supply of new housing (with land prices on a plot basis) and
housing units in relation to the overall stock prices per m2 of land for apartments. The
of housing will be more significant at the Swedish data are for land for houses, mealocal level . All these factors therefore point sured in terms of the average price of each
to the need to analyse the relationship be- transaction and the average transaction size
tween the planning system and land supply at in m2. In the analysis which follows, we have
a local level . Before turning to the case used land data for houses rather than apartstudies, however, it is first necessary to con- ments for ease of comparison. It should be
sider problems of data availability and noted that the construction of houses is concomparability .
siderably less important than apartments in
the E4 Corridor, accounting for 40 per cent
Data Problems
of completions in the 1980s .
Information on land markets is notoriously
A further problem for making accurate
hard to interpret, even assuming sufficient comparison is the fact that the French and
data can be obtained in the first place . The Swedish data are for `raw' housing land plus
housing land price series used here were basic infrastructure . This is not the case for
derived from a number of sources and are as the DoE series . The cost of infrastructure is
comparable as possible . The Swedish data thought to increase the basic land cost by c .
were provided by the national statistical bu- 45 per cent in the UK (see Conran Roche,
reau (SCB), which was able to create special 1989).
tabulations specifically for the nine caseSince 1981, the DoE has published two
study communes (see Figure 1) . This series on the housing land market, one more
information was supplemented by interviews widely based than the other . What is termed
with planners and developers. For the UK, here the `narrow series' (Table 10 .1 in the
we used the DoE's housing land price series . annual DoE Housing and Construction
The DoE was able to provide data Statistics) is restricted to sites with planning
specifically for Berkshire (Figure 1) and permission and covers only sites which are
again this information was supplemented by used to create the DoE's land price index .
interviews with planners and developers. Fi- The `wide series' (Table 10 .2) includes sites
nally, the French data were assembled from without planning permission but which are
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CONTROLLING THE HOUSING LAND MARKET
1135
Ile de France Region
••••••••••
Department boundary
Midi - Pyrenees Region
Department boundary
Stockholm County
•- -
--
=
#
ii=
Stockholm Metropolitan Area
Commune Boundary
-at=
Uppsala
or
Legend for all maps
® Economic Growth Zone
an dHousing Impac t Z one
Housing Impact Zone
Figure 1 . The case-study areas : the South Paris growth area (top left) ; the Toulouse metropolitan region
(top right) ; Berkshire and the M-4 Corridor (bottom left) ; and the E4 communes in the Stockholm region
(bottom right) .
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1 136
JAMES BARLOW
known to be destined for housebuilding . One
important limitation of both series is that
only larger purchases of land, i .e . sites with
four or more plots, are covered . Each series
provides information on the amount of land
sold-i .e . total area, number of transactions
and number of plots-and its price . According to the DoE, the narrow series provides a
better long-term indicator of price trends
while the wider series provides better coverage of the market in any given year .
The price series for Toulouse have been
derived from AUAT data on prices per plot
for 'self-promoted' houses . Using AUAT
data we have also produced average prices
for developer-built houses . Land prices in
South Paris have been estimated from
Vilmin's study of three communes (Vilmin,
1987), weighted according to the number of
housing completions in each commune (for
1980-84), and data provided by the Direction
Ddpartemental de l'Eyuipement for 48 communes, similarly weighted (for 1989) .
The E4 Corridor series have been estimated from the land price per m2, weighted
according to the number of transactions in
each commune .
The Planning System and the Land
Market in Four Boom Areas
Housing Development and the Planning
Framework
Berkshire, Toulouse, South Paris and the `E4
Corridor' north of Stockholm (see Figure 1)
were selected as case-study areas because
they had each experienced considerable employment growth, based on similar economic
sectors, during the 1980s . Average household
income levels were relatively close, thereby
minimising the effect of wide divergences in
disposable income on housing expenditure .
In order to delimit a suitable case-study area,
we initially identified an `economic impact
zone' of maximum employment growth and
then attempted to establish a `housing impact
zone' based on commuting patterns . Full details of the selection process and the
case-study areas themselves can be found in
Barlow and Duncan (1992) .
Briefly, each area saw the construction of
large amounts of new housing during the
1980s and their housing markets remained
relatively buoyant throughout the decade . In
Berkshire new construction averaged approximately 5000 dwellings per annum for much
of the 1980s and new housing accounted for
about 21 per cent of the 14 000 dwellings
traded in the county in any given year. The
French examples were also extremely buoyant. South Paris, encompasing the northern
part of the departements of Essonne and
Yvelines, was one of the region's key areas
of economic and population growth during
the 1980s . Annual housing completion rates
averaged 6000-7000 dwellings during the
1980s . Toulouse was also an extremely dynamic growth area . Here, total completions
grew from under 4000 in 1980 to almost
7000 in 1988 . Finally, in the E4 Corridor,
stretching from the northern suburbs of
Stockholm to Arlanda Airport, annual completions during the 1980s averaged 20004000 units . On a per capita basis, this was
considerably higher than the other case-study
areas .
While crude housebuilding levels were
high in all four areas, the part played by
different types of developer varied considerably . Private speculative developersbuilding for owner-occupation-were always
dominant in Berkshire, but their share of
completions grew from around 65 per cent to
90 per cent over the decade . Local authority
and housing association completions fell
from about 35 per cent to 10 per cent over
the same period .
Housebuilding in South Paris was also
dominated by speculative developers, who
accounted for 46 per cent of the output during the 1980s . The market share of
lotissement housing (where plots are assembled by speculative purchasers but dwellings
built for individual households by specialist
companies) fell from a peak of 24 per cent in
1986 to 14 .8 per cent in 1989 and social
housing agencies (HLMs) played an increasingly marginal role . Most of the few housing
in South Paris was therefore built by speculative developers for owner-occupation .
In contrast, until 1986 half the total com-
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CONTROLLING THE HOUSING LAND MARKET
pletions in Toulouse were in the lotissement
sector, although this level has now fallen to a
quarter . Most of the balance has been taken
up by speculative development . However,
while private housebuilders are dominant in
both French case-study areas, much of the
new construction is `regulated' via the
financial subsidy system . In South Paris, 45
per cent of completions in 1987-89 were
built for the PAP/PLA marketpret a
1'accession a la propriete (subsidised housing for lower-income purchasers) and pret
locatif aide (subsidised housing for lowerincome tenants)-and a further 26 per cent
for the PC marketpret conventions (subsidised housing for middle-income purchasers). In Toulouse, the output of regulated
housing is higher : during the 1980s about 58
per cent of new completions were in the
PAP/PLA sectors . While most of the output
was for sale to owner-occupiers or private
investors (for subsequent renting), HLMs
providing housing for social renting have
also remained an important force, accounting
for 15-25 per cent of annual completions .
Finally, in the E4 Corridor, completions
by commune housing companies (for affordable renting) remained relatively steady at
around 40 per cent of total output during the
1980s. For the balance, however, there was a
striking realignment between different types
of developer : the share of private-sector developers building for owner-occupation or
private renting collapsed from about 40 per
cent to 10 per cent between the early and late
1980s; co-operatives (building for a form of
shared-ownership) increased their share from
15 per cent to 40 per cent . 'Self-promotion'
accounted for the remainder, growing from
about 10 per cent to 15 per cent .
The structure of local government also
varies considerably between the case-study
areas . The French examples are fragmented
into a large number of small communes, each
with considerable autonomy to make decisions on planning applications . The Toulouse
metropolitan area (total population 605 000
in 1988) is dominated by Toulouse itself
(with a population of 350 000) and is subdivided into a further 61 communes . There is
1137
relatively little co-ordination in planning between the various municipalities. South Paris
(with a population of 1 735 000 in 1990)
comprises 82 communes in total . These fall
into three distinct sub-markets consisting of
two new towns (Evry and St. Quinten-enYvelines) and a large undeveloped area
subject to considerable development pressure . There is some co-ordination at the
regional level, but in general each commune
has a high degree of autonomy .
Berkshire (total population 718 000 in
1989) comprises a county council, responsible for broad strategic planning, and six local
authorities, responsible for the day-to-day
administration of planning applications and
the formulation of local plans . One characteristic feature of Berkshire over the last 20
years has been the fact that development
pressure has been channelled into the county
because surrounding counties have exercised
restraint policies .
Finally, the E4 Corridor (population
387 000 in 1987) comprises nine communes .
Local authorities in Sweden have a far higher
level of political autonomy and considerable
fiscal powers (Elander and Montin, 1990) .
This includes the ability to purchase land for
public land banks for housing development
and an obligation to formulate local five-year
housing plans. While this is the case in the
E4 Corridor, to some extent policies established at a metropolitan level have set the
broad parameters for housing development
during the mid to late 1980s . In 1986, a
Housing Delegation (Bostadsdelegation) was
set up by national government to tackle the
housing shortage perceived in Stockholm
County . Stockholm County covers the Stockholm metropolitan region including the E4
Corridor-(see Figure 1 .) In order to shift the
emphasis from commercial to residential development, this recommended an overall
limit to commercial building (set at 70 per
cent of 1986 levels) and that there should be
a 1 :1 balance between office development
space and housing space . A 10 per cent tax
on investment in commercial building in the
area was later imposed and subsequently
raised to 30 per cent in 1990 . Other com-
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1 13 8
JAMES BARLOW
Table 1 . Land price per m 2 of housing space (£ per m2 converted at purchasing power parity)
Year
E4 Corridor'
Berkshireb
Toulouse
South Parisd
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
55
56
64
62
66
66
64
99
126
152
118
98
118
132
206
169
242
370
-
105
105
121
112
122
138
148
204
236
248
254
268
375
409
' E4 Corridor represents the land cost for houses built under the SHL
system . Assumes average plot size of 600 m2 . Average dwelling sizes
have been derived from data provided by SCB .
b Berkshire data include some land for apartments, therefore average is
likely to be overestimated . Data from DoE special tabulation, mean land
prices for `wide' series . Average dwelling size from Nationwide Building
Society data; average plot size estimated from DoE data on plots/ha (see
text) .
` Toulouse estimates are for lotissement sector houses . Figures assume a
dwelling of 115 m2 . Plot size from AUAT data .
d South Paris estimates are for lotissement sector houses . Average
dwelling size estimated from GRECAM data (1980-84 : 117 m2 ; 1986:
99m2 ; 1988-89 : 114 m2 ) . Assumes a 550 m2 plot .
mentators (LSL, 1989) called for the encouragement of a freer property market which, it
was claimed, would restore profitability to
private housebuilding and boost completion
rates . There have now been moves in this
direction .
Having discussed the broad features of
each case-study area, we will now consider
their land markets . The next section exammines the land price trends during the 1980s
and the relationship between planning, land
supply and land and house prices inflation .
Land Price Trends
Table 1 compared the absolute price per m 2
of land for houses, converted into sterling at
purchasing parity . The table shows the actual
land price element for houses-i .e . the price
per m2 of housing space . While a number of
assumptions have been made in drawing up
this table (see notes to table), it provides as
accurate as possible an indication of the absolute price differences in each case-study
area. Some qualifications should, however,
be made when interpreting the figures . The
prices are actual prices per m 2 of housing
space, and are not standardised to take into
account differences in plot and dwelling size .
Houses in South Paris and Toulouse tend to
be larger than those in Berkshire and, more
significantly, plot sizes are larger .
The extremely high price of housing land
in Berkshire and South Paris can easily be
seen from this table . At around £400 per m 2
in 1988, land in these areas is about three
times as expensive as its equivalent in the E4
Corridor . Prices in Toulouse were generally
slightly higher than the E4 Corridor.
Because of the differences in average
dwelling and plot size between each casestudy area, we have recalculated these land
prices assuming the dwellings are a 'standard' Berkshire new house (dwelling size: 99
m2 ; plot size : 374 m2) . These i have been
estimated using data from the DoE on the
average number of plots per hectare on land
sold in Berkshire and data from the Nation-
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1139
CONTROLLING THE HOUSING LAND MARKET
Table 2. Land price per m2 of housing space, `standard' Berkshire dwelling
(dwelling size : 99 m2; plot size : 374 m ), £ per m 2 converted at purchasing
power parity
Year
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
Source :
E4
Corridor
39
49
43
47
46
47
61
78
95
110
Berkshire
Toulouse
117
117
155
177
225
283
365
648
70
71
79
81
85
95
104
South Paris
162
186
195
201
211
296
323
derived from Table 1 ; see text.
wide Building Society on the average size of
new houses sold in Berkshire . Land prices in
Berkshire have also been inflated by 45 per
cent to take into account infrastructure costs .
Table 2 shows these land prices . While the
prices in South Paris are still generally
higher, Berkshire prices increase extremely
rapidly in the mid 1980s and were over 100
per cent higher by 1988 .
Despite the difficulties in data availability
and the definitional differences between the
UK and France, the fact that a comparatively
large proportion of the market for new housing comprises single family dwellings for
sale makes comparison to some extent meaningful . The problem with Sweden is that this
type of housing-especially in the case-study
area-represents a fairly small share of the
market . In the E4 Corridor, single family
dwellings for sale accounted for only 15 per
cent of completions during the 1980s, a further 16 per cent were self-promoted for
owner-occupation. Most of the output comprised flats built for commune housing
companies or for co-operatives, although this
depended on the commune (Barlow and
Duncan, 1992) .
Commune landbanking appears to play an
important part in housing land supply in the
E4 Corridor. Most communes have large reserves, built up during the 1960s and 1970s
(almost all undeveloped land in Taby is
owned by the commune) . The length of time
over which landbanks were built up and the
fact that there are few transactions in any
given year, makes it impossible to derive an
`average price' of commune-purchased land .
In 1990, interviews with planners suggested
that the price paid by communes for `raw'
land (i .e . greenfield sites with no infrastructure) was about SEK 50-60 per m2 (1988
exchange rate : £1 = SEK 10 .90; 1989
rate = 10 .56) .
Communes sell land from their reserves at
much higher prices, although these are limited by the maximum allowable under the
SHL system . Land for flats, with infrastructure, is sold at prices which, in 1990, ranged
from SEK 500 to SEK 850 per m 2 of built
space . The norm at this time appeared to be
around SEK 600-700, around the SHL limit .
By 1992, prices had fallen to SEK 300-600
per m2. Prices for single family dwellings are
higher, at around SEK 500-600 per m2 in
1992. Land prices for single family dwellings
built outside the SHL system are much
higher, though . At the peak of the house
price boom in 1989, plots in desirable areas
exceeded SEK 600 000-well above the
maximum limit permitted under the SHL
system (SEK 500 000) . By 1992, prices had
fallen back to SEK 400 000-500 000 though .
There are therefore clearly large absolute
differences in the price of housing land in
each case-study area. To what extent have
the growth regions experienced land price
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1 140
JAMES BARLOW
E4 Corridor
...... ... ... .....
Berkshire
. . . . . ... ... .... ...
Toulouse
South Paris
Figure 2. Deflated land price index for single family dwellings (1984 = 100) . (Sources : see text) .
inflation, though? Figure 2 shows the real
change in housing land prices during the
1980s, with 1981 as a base year . While
prices have risen in all areas, Berkshire
stands out with a threefold rise since the
lowest point of its cycle . In contrast, prices in
the E4 Corridor were comparatively stable
until the three-year boom in 1987-89 . Toulouse and South Paris experienced slightly
rising prices .
It is more useful, perhaps, to compare
prices in the case-study areas with their national and regional averages, since this
allows us to see the extent to which the land
markets in the growth areas are `overheating'
(Table 3). Not surprisingly, all the case-study
areas are areas of relatively high land prices .
Berkshire, for example, was over four times
as expensive as the national average in 1988
and was almost always at least twice the
national average. The E4 Corridor was also
at least twice the national average throughout
the decade . Toulouse and South Paris are
also relatively expensive ; in fact, the latter
consistently displays the highest relative land
prices for all the case studies . Generally, the
E4 Corridor and Berkshire were becoming
more expensive during the mid to late 1980s,
while there was no clear trend in Toulouse .
South Paris appears to have seen a rise in
relative land prices during this period, but the
lack of a full time series hampers full analysis of the trend .
Of course, it is possible that the growth
areas are simply experiencing rates of land
price inflation which affect the surrounding
region as a whole. It is useful, therefore, to
compare land prices in the case-study areas
with those in the surrounding regions . This
provides a good indication of any `local'
effects causing the growth areas to overheat
faster than neighbouring areas . Unfortunately
we cannot perform this exercise in the
French examples, but from Table 3 it can be
seen that prices in Berkshire generally remained relatively constant in relation to the
Outer Metropolitan Area during the 1980s .
The same was true for the E4 Corridor. This
therefore suggests that there were no
specifically `local' factors causing rapid land
price inflation .
The key points to emerge from this analysis of price trends in the growth areas are the
following. First, absolute price differentials
are high, with Berkshire and South Paris
standing at one extreme, and Toulouse and
the E4 Corridor at the other extreme. Secondly, inflation pressures appear to be
highest in Berkshire . Thirdly, Berkshire and
the E4 Corridor do not display any specific
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CONTROLLING THE HOUSING LAND MARKET
Table 3. Land prices in the case-study area compared to national and regional averages
Year
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
E4/Sweden E4/Stockholm
358
302
249
253
227
209
249
283
337
Berkshire/
England and Wales
Berkshire/
OMA
259
213
228
253
265
250
323
412
-
104
89
100
88
91
85
105
100
-
104
109
117
113
125
113
108
131
116
108
Toulouse/ South Paris/
France
France
136
136
166
151
145
144
138
332
328
319
328
345
391
380
Note : Berkshire figures based on median land prices ; other case studies based on mean .
Source: derived from data in Table I and national data .
`local' trends. (We cannot determine whether
this is the case in the French case-study
areas.)
It is now necessary to examine some of the
possible explanations of these differences .
We have argued that in order to understand
the relationship between the planning system, land supply and land prices it is
necessary to consider the extent to which
supply is flexible (and over what period) and
the different strategies adopted by developers
and landowners . It is also possible that high
house prices have driven up land prices, because developers operate a `residual' method
of bargaining in the land market . The next
section examines some of the possible reasons for the differences between the
case-study areas .
Land Supply,
Developer
Strategies
and
House Prices
Table 4 shows the annual rates of land and
house price inflation for Berkshire, together
with the change in the amount of housing
land sold and the number of dwellings completed . A striking feature of the table is the
violent up and downswings in the amount of
land traded and, to a lesser extent, the number of completions . The period 1982-83 was
marked by a massive increase in sales of
land, with a large rise in completions following in 1983-84 . By 1984-85, however, land
sales were falling, with a decline in completions following in 1985-86 . There was
another surge in land sales in 1985-86, but
this time completions only increased slightly
(in 1986-87) . In the period after 1986-87,
land sales and completions fell dramatically
as the recession in the housing market began
to bite. These figures therefore suggest that
in Berkshire speculative activity in the land
market preceded completions by about 1-2
years during the 1980s .
How do these trends compare with
changes in house prices, though? From Table
4 it can be seen that the period 1982-83 saw
an increasing rate of house price inflation,
matching the large increase in land sales and
completions . The slight fall in house price
inflation in 1984-85 corresponds with a
slump in land sales and, later, a fall in completions. By 1986-87 land price inflation was
high (and growing), with land sales initially
surging, then slumping . During this period,
house price inflation was fluctuating considerably, while completions were generally
falling . Finally, 1987-88 saw house price
and land price inflation peaking, but land
sales collapsing. Completions began to fall
after a lag of 1-2 years .
Thus, changes in house price inflation in
Berkshire appear to match changes in land
prices during the early 1980s (although the
magnitude of changes is different for each) .
After 1984-85, though, the sustained in-
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1 142
JAMES BARLOW
Table 4. Percentage changes in land and house prices, land supply, dwelling completions in Berkshire
Year ending
Land price
House price
1982
1983
1984
1985
1986
1987
1988
1989
2.9
31 .5
14.4
25 .2
26.3
29 .4
76.7
3 .6
14 .5
4 .4
6 .1
18 .4
8 .2
20 .0
-
Land sales
187 .0
57 .6
0.0
-56.7
188 .9
-20.8
-25 .2
-
Completions
-29 .0
25 .0
40 .0
1 .8
-19 .0
5 .5
-63
-24 .5
land prices (DoE `wide' series) ; house prices (derived from Nationwide
Building Society and DoE special tabulations) ; land sales (DoE `wide' series) ;
completions (DoE).
Sources :
crease in land price inflation-from 14 .4 per
cent to 76 .7 per cent per annum-was only
partly matched by house price inflation . This
implies that land price inflation was either
fuelled by speculative activity in the land
market or an increasingly restrictive planning
system .
We can gain some impression of the level
of speculative land trading in Berkshire from
the timing of surges in land sales in relation
to changes in land and house prices . As noted
above, extremely large increases in land sales
occurred during 1981-83, preceding increases in the rate of land and house price
inflation . This suggests that developers and
landowners were engaged in speculative activity during a period of relative calm in the
housing market . These purchases of development land appear to have been translated into
completions after a year or so, but the fall in
house price inflation seems to have introduced excessive caution amongst developers
as land purchases slumped in the mid 1980s .
Land prices continued rising rapidly, however, inducing another surge in trading .
While house price inflation was relatively
high, land sales were declining, suggesting
either a flooding of the market or tightening
in the planning system .
Further evidence for speculative activity
comes from the balance between land sold
with planning permission for housing and
land sold without permission . Taking the difference between the DoE's `wide' and
`narrow' land sales figures as an indication of
the amount of speculative land sold (i .e.
without planning permission), it is clear that
in Berkshire there was a steady rise in sales
of this type of land during the 1980s . The
amount of speculative land sold as proportion of sales of non-speculative land grew
from 28 per cent in 1981 to 93 per cent in
1984 ; fell to about 50 per cent during 198587 ; and then rocketed to 108 per cent in
1988 . The earlier period of rising speculative
land purchase appears to tally with the activity in the land market prior to the 1983 rise
in house prices and completions, described
above. The relative decline in speculative
land purchase seems to correspond with the
downturn in the land and housing market
from 1984-85 . These trends lend weight to
the suggestion that there was a considerable
amount of land trading prior to inflation in
house prices .
However, land sales data merely indicate
the level of transactions in any given year . It
is possible that future land availability was
becoming more restrictive during this period
(see Barlow, 1990, for details) . The fact that
throughout the early to mid 1980s there was
a `slippage' between planned completions
(i .e . targeted under the county structure plan)
and actual completions (i.e . including those
granted on appeal and on windfall sites)
would suggest that the planning system was
quite flexible at this time . However, there
was a reduction in the success rate of resi-
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1143
CONTROLLING THE HOUSING LAND MARKET
Table 5. Percentage changes in land and house prices, land supply and dwelling
completions in Toulouse
Year ending
Land price
1982
1983
1984
1985
1986
1987
1988
1989
1990
14.3
30.2
-6.4
-7 .7
48 .1
15 .6
-12 .2
59 .1
n.a .
House price
20 .5
12 .7
-1 .7
2 .2
0 .6
14 .1
6.8
4.1
3 .2
Land sales
Completions
-22.0
-28 .2
18 .6
3 .1
-8 .3
2.8
43 .8
23 .1
n.a .
-20.0
27 .6
38 .8
-24 .1
-1 .4
44 .7
62 .4
-33 .5
n .a .
land prices (derived from AUAT data) ; house prices (derived from DDE
data) ; land sales (AUAT) ; completions (DDE).
Sources :
dential applications and the proportion
granted on appeal generally rose . In addition,
`current housebuilding commitments'-the
developers' planned output on allocated sites
at a given time-fell substantially between
1976 and 1988 . In other words, developers
were `building out' their sites-finishing
them off without replacing their local landbanks-even during the height of the
housing boom in the mid 1980s . There was
also a slight rise in average building site
density, while the average site became
smaller in terms of permitted units and area .
There could, of course, be various reasons
for these trends . Rising land prices may have
forced developers to increase the number of
dwellings per site (cf. Cheshire and Sheppard, 1989) . It is also possible that growing
anti-developmental protest and lobbying
(Barlow and Savage, 1986; Short et al .,
1986) had an impact on the local planning
process which resulted in a growing unwillingness of local authorities to sanction
greenfield large-scale land release . This may
have fuelled underlying speculative activity .
Certainly, larger housing developers interviewed at the time were scathing about
the activities of `speculative entrepreneurs',
arguing that they fuelled inflation, led to
increased competition and caused 'legitimate' developers to spend more time and
resources devoted to land acquisition .
Whether or not land supply in Berkshire
was tightened during the 1980s, the system is
very much a lottery for developers . In contrast, the planning system in Toulouse
affords much less uncertainty for the development industry . Here, there is a significant
'pro-growth coalition' comprising local employers, developers, landowners, eight local
municipalities, universities and financial
institutions (cf. Dreulle and Jalabert, 1987).
The planning system is geared towards relatively easy land release . The administration
running Toulouse commune has generally
favoured private-sector development and
relaxed its planning policy in the mid 1980s
by modifying the local POS and allowing
higher densities. On the other hand, some
other communes-especially those in the
inner suburbs with socialist administrations-have been more concerned with
controlling private-sector development and
promoting HLM or joint public-private
housing schemes . In addition, the fragmented nature of local government has led to
inner-commune conflict over development
pro- posals and a lack of overall planning coordination . However, the generally relaxed
attitude towards new development in the
metropolitan area as a whole is clear from
the success rate of residential development
applications . Between 1980 and 1989 only
8 .4 per cent of the 27 267 applications were
turned down .
Table 5 shows the annual changes in land
and house prices, the amount of land sold
and dwelling completions . During 1982-83
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1 144
JAMES BARLOW
there was a sharp fall in land sales, with
completions falling and then rising . This
occurred against a background of high rates
of land price inflation . The following year,
1983-84, saw a surge in land sales and completions, but falling land prices . There
followed a period (from 1985 to 1987) of
relatively stable land sales and initially
falling completions . However, a sudden upturn in housebuilding occurred in 1987 .
Despite the sluggish land sales, inflation was
high, which may have accounted for the slow
reaction of landowners to the rise in completions-although completions grew by 45 per
cent in 1986-87 and a further 62 per cent in
1987-88, land sales did not take off until
1987-88 and continued at a high level until
after the peak in housebuilding .
House price inflation was relatively low
throughout this period, broadly matching the
change in land prices (albeit at a lower rate)
up to 1985. After 1985, however, the surges
in land prices were not matched by rapidly
increasing house prices (e .g . 1986-87 and
1989-90) .
Tou=louse
The slow reactions of landowners in
to inflationary booms and downturns,
such as those in 1982-83 and 1988, suggest
that they may be less well-organised-perhaps because of a fragmented ownership
pattern-than their counterparts in Berkshire .
Interviews with housebuilders confirmed that
they tend to buy land only for their immediate use and pay the landowner once the
scheme is completed. This implies that it is
the developers, rather than landowners, who
tend to have the upper hand in the Toulouse
land market. It is also possible that the relatively flexible planning system, and the
loosening of the POS, may have resulted in a
flooding of the land market in 1987-89, leading to an initial surge in completions and a
fall in land prices in 1988 . Cheap land has
also been provided by the communes, departement and SEMs (mixed public-private
development companies) through their use of
pre-emption powers and the creation of special development zones . During the first half
of the decade these were mainly to aid
HLMs, but more recently they have been
used to speed up private-sector development .
An average of 16 ha per annum was bought
using these powers during the 1980s, although by 1989 the amount was negligible .
We should not, however, exaggerate the
effect of pre-emption powers . Most communes have neither the administrative nor
the financial resources to pursue a systematic
policy of pre-emptive land purchase . Indeed,
rapid land price inflation may deter communes from undertaking pre-emptive
purchase because of the financial implications .
A more important limitation on house and
land price inflation is the general effect of the
housing finance system . Since most of the
housing built in Toulouse is under the PAP/
PLA/PC system, with limits placed on house
prices and construction costs, house price
inflation is dampened . This implies that developers in Toulouse have relatively little
control over land costs and housing sales
prices, and attempt to maximise turnover
rather deal speculatively in land .
The limited information on land sales and
price inflation in South Paris means that we
can say very little about the relationships in
this area . However, the picture appears to be
less straightforward than Toulouse or Berkshire, varying between each sub-market . In
Essonne, it appears that parallel to a shift in
commune policies in favour of new development after 1985, an anti-growth residents'
movement began to emerge . Some local
mayors were said to have blocked new development applications in the run-up to local
elections . Since 1987 land reserves in the
zones designated for future development
have fallen from 928 ha to 793 ha, around
five years' output at current rates of housebuilding . However, there has been intense
pressure from farmers for revisions to the
POS to allow more development and there
has been a rise in the amount of land in the
`speculative' market-i .e . land sales which
were not for immediate development . Generally, communes were pursuing at relatively
pro-development stance in the late 1980s.
Vilmin (1987) found that 17 communes had
a `negative attitude' towards development, 8
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1145
CONTROLLING THE HOUSING LAND MARKET
Table 6 . Annual rates of price inflation, South Paris
Apartment
Houses
Year ending
St. Quentin
MSP
Evry
1987
1988
1989
1990
10 .2
-12 .6
54 .5
-2.3
45 .3
7.9
15 .8
20.7
17 .0
-6.3
13 .0
13 .7
Source :
St. Quentin
12 .2
21 .0
3.2
9.8
MSP
Evry
-7.9
32 .6
7.3
0.1
16.2
11 .0
25 .7
-1 .8
derived from DRE data.
were neutral and 42 were `positive' . The
`negative' communes generally took this position because of their lack of a suitable tax
base from which to provide the necessary
infrastructure and/or their demography (a
young population and no perceived need to
increase the number of households) . Nevertheless, there has been a rise in anti-growth
residents' groups in certain areas, although
these have not yet reached the same level of
organisation as those in South East England.
This is especially the case in the west around
Versailles and Hants de Seine, where residents' protest groups are said to be more
strongly organised . However, in the core of
the South Paris growth zone, Massy-SaclayPalaiseau, there is said to be effectively no
anti-development pressure because the area
is seen as `dead' and new development will
bring in employment, housing and leisure
facilities .
Why is house price inflation limited in
Toulouse but more acute in South Paris, despite the same planning model? Perhaps the
most important reason is the fact that a growing share of development has been in the
unregulated sector. Massy-Saclay-Palaiseau
provides a sharp contrast to the new towns of
Evry and St . Quentin. Here there is no
unified land assembly by the local communes
and a much lower proportion of dwellings
are completed under the PAP/PLA/PC system. Prices tend to be much higher and
inflation rates are more erratic (see Table 6) .
There is not enough data available to examine the relationship between land and house
price inflation in as much detail as Toulouse,
but it appears that the price of new housing
has risen steadily, and at an increasing rate,
throughout the 1980s. We cannot, however,
determine whether this follows or leads to
the rise in land prices described above.
The considerable local powers of Swedish
communes mean there are noticeable differences in policies towards housing development within the E4 Corridor . In an area
exposed to both market pressures and centralisation of planning (via the Housing
Delegation), commune-level political choices
remain crucial to the form and balance of
housing promotion . These. are reflected in
differences between communes in the share
of housebuilding by promotion and tenure
form, and landbanking (Duncan and Barlow,
1991) . Sundbyberg, for instance, is overwhelmingly dominated by municipal housing
companies, which accounted for 96 per cent
of total completions from 1980-89 . In complete contrast, only 7 per cent of completions
in Vallentuna were in this sector, while 66
per cent were by co-operatives .
There is evidence that there are also differences between communes in terms of their
intervention in the land market . This arises
partly from political differences because of
growing problems in sustaining the traditional approach to land banking in the face of
higher land prices and declining land
availability . This has meant that some communes have found it increasingly hard to
replace their land banks . For instance, Vallentuna stopped buying land in 1985 when it
felt prices were too high ; Sollentuna aims to
maintain a land bank sufficient for 60 per
cent of production for the next 10 years,
but is finding this increasingly expensive .
There is some evidence that one responseused by Sollentuna and to some extent other
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1 146
JAMES BARLOW
Table 7 . Percentage changes in land and house prices, land supply, dwelling completions in E4 . Corridor
Year ending
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
(-)
Land price
11 .7
-4.9
27 .9
-9.8
12.7
0.0
5 .1
28.5
(28 .9)
(22 .4)
(18 .5)
House price
13 .8
19 .1
3 .3
10 .5
2 .6
12 .7
-2 .7
13 .6
Land sales
-41 .9
230.9
40.3
20.6
-3 .1
-4 .1
-25 .9
21 .4
(-4 .7)
(53 .4)
(-48 .8)
Completions
-12 .7
-17 .9
-19 .8
106 .0
-19 .0
-17 .3
-52 .0
25 .2
12 .4
53 .4
-24 .5
Estimated .
Sources: land prices (SCB Data) ; house prices (measured as `production costs' ;
SCB data) ; land sales (estimated number of transactions and average transactions
size ; SCB data); completions (SCB data) .
Conservative-controlled communes-is to
sell land from their land banks at a high price
for commercial development in return for
planning gain in the form of low-cost housing units . As well as this more overt form of
planning gain, private developers have begun
to operate in a `semi-speculative' way (Barlow and King, 1992 ; Duncan and Barlow,
1991) by `suggesting' new schemes on private land to communes, with development
involving a mix of office space and public
and private housing .
It is also the case that the planning and
housing supply process in the E4 Corridor is
not immune from political lobbying against
new development . This appears to have increased since legislation in 1987 which gave
more scope for residents to become actively
involved in the planning process . Nevertheless, the tradition of corporatist negotiation
between and within local state bodies and
regional institutions of central government,
together with the strong local political framework, plays a crucial role in containing this
protest .
What is the relationship between land supply and house and land price inflation in the
E4 Corridor? The dampening effect of the
SHL system, which places limits on the land
price element in housebuilding costs, and the
fact that the bulk of new housing is built on
land obtained from commune land banks
should mean that there is only a limited
effect of land supply constraints on the price
of new housing . However, it is clear that
there is at least some inflation in the housing
land market and prices have crept up to the
SHL limits .
Table 7 shows the key land market indicators for the single family dwelling sector, and
is thus only a partial picture . We have not
been able to obtain equivalent data on land
supply and prices for apartments . There are a
number of striking features to the figures in
this table . First, until 1987 land price
inflation was stable, with rises in one year
being matched by falls in the next, despite
sharp swings in the volume of land sold .
Secondly, the period after 1987 saw much
more extreme rates of land inflation, but no
overall change in land sales . Thirdly, the
change in house prices has generally followed land prices, although at a lower rate .
Unfortunately, we have been unable to obtain
house price data for the period after 1988 .
However, the fact that the high rates of land
price inflation in 1987 and 1988 did not
result in a sustained pattern of house price
inflation suggests that the SHL system has
been able to hold down house prices . This in
turn suggests that housing developers will
have faced reduced profit margins during this
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CONTROLLING THE HOUSING LAND MARKET
period, since they were experiencing rising
land (and construction) costs but stable house
sales prices (see Barlow and King, 1992) .
The primary factor behind land price
inflation in the E4 Corridor appears to be the
general level of demand for land for commercial development in the Stockholm areas
as a whole. This has pushed up prices in the
open market, ultimately the source of all
development land, and it remains to be seen
how long the subsidy system can be maintained in the face of such levels of inflation .
Conclusions
This paper has examined the relationship
between planning systems, land supply and
house and land prices in growth areas in
Britain, France and Sweden . We have seen
how the very different approaches to housing
provision and planning result in different
land market outcomes, despite similar levels
of growth in local housing and labour markets. The housing land market in Berkshire
was subject to considerable speculative activity during the 1980s. Landowners and
developers displayed high degrees of risktaking behaviour-even if their expectations
were not always fulfilled . As we saw, house
price inflation was to some extent dislocated
from land price inflation by the end of the
decade. This suggests that the influence of
the local planning system over land market
activity is less direct than is commonly assumed, and the volume of transactions is to
some extent independent of land release by
local planning authorities . However, it is also
likely that speculative activity is exacerbated
by the uncertainty of the planning process
and the perceived tightening of land
availability in the 1980s . The British case
study therefore suggests that while the
British planning system may provide a degree of short-run flexibility-i .e . a capability
of responding to immediate changes in demand, assuming sufficient land has been
identified as available-the uncertainty over
the longer run provokes speculative behaviour on the part of developers and
landowners .
1147
The French examples provide an interesting contrast . These show that a zoning
system can be more flexible in that it responds comparatively quickly to increased
demand in the short run . However, much
depends on local conditions . Political differences between communes means variable
outcomes in zoning terms, as well as differences in emphasis towards the alternative
types of housing finance . In Toulouse, the
generally pro-development stance has resulted in large-scale zoning in an area of
fragmented landownership pattern and disorganised landowners . This has led to periodic
gluts and famines of land release, which have
led to swings in land price inflation . However, the emphasis on price-regulated
housing (through the PAP, PLA and PC systems) has held down house price inflation .
The implication of this description is that
there is a continually shifting balance of
power between landowners and developers,
with the former weak during gluts and the
latter facing reduced margins during famines
as land prices rise and house prices remain
relatively stable.
The South Paris example lends weight to
the idea that house price inflation is limited
by the finance system . As we saw, far less
new housing was price controlled than in
Toulouse and price inflation rates were much
higher. This was also the case within the
South Paris area, with the new towndominated by price-controlled housingexperiencing low inflation .
However,
extremely high base level house prices in
the Paris region as a whole appear to have
resulted in high absolute land prices throughout the 1980s . These may have been
exacerbated by growing constraints on land
availability and by speculative trading .
Finally, the approach in the E4 Corridor is
wholly different . Here, long-term land banking by communes acts as a buffer against
price inflation in the `open' land market . The
finance systems acts as an additional brake
against land price inflation . Nevertheless, the
E4 Corridor is not immune from inflationary
pressure. Communes have found it increasingly expensive to replenish their land banks .
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1 14 8
JAMES BARLOW
Furthermore, upward pressure on open market land prices has led to rising subsidies
during the 1980s . Ultimately, inflation in
land and construction costs is therefore translated into inflation in the SHL system.
The analysis of the growth regions therefore reinforces the points made in the
introduction to the paper . First, the responsiveness of land supply to changes in demand
can only be assessed in relation to the period
over which the analysis is being conducted .
There is no absolute long or short run, since
these depend on the land market and political
conditions, as well as the prevailing planning
model. Secondly, the land market strategies
adopted by landowners and developers vary
considerably and are partly shaped by the
prevailing planning model . Most important is
the way in which speculative and risk-taking
behaviour is dampened by increased planning certainty . Thirdly, local differences
within countries, and even within regions,
arise from the independence of local authorities in planning terms . There is no absolute
control or fixity of land supply within planning systems, either spatially or over time .
Thus, we cannot understand the relationship
between land supply, planning and land and
house price inflation in isolation . The prevailing structure of housing provision and
planning will shape the precise outcomes in
that area. However, this does not mean that
we cannot draw any generalised conclusions .
There is clearly a link between risk-taking
behaviour and the level of certainty in
planning systems . The Planning and Compensation Act (1991), which gives more
weight to local plans, may ultimately shift
the British approach towards a variant of the
French model .
Acknowledgements
This paper was based on research carried out
in three ESRC-funded projects : D00232280
(housing provision in European growth regions), R000231648 (housing and labour
market relations in a British growth region),
and R000232698 (the politics of urban development in European growth regions) .
Funding was also provided by the Swedish
Council for Building Research (BFR) .
I would like to thank my co-researchers
on these projects, Simon Duncan and Peter
Ambrose, for their help and comments, and
Kate Williams for data analysis . Christine
Corbilld at the Institute d' Amenagement de
la Region de 1'Ille de France (IAURIF),
Serge Olivier at the Direction D6partemental
de l' Equipement de l' Essonne and M . de
Cornuellier at SAFER (Paris) all provided
their time and help with data, as did members
of the CIEU (Universite Toulouse-Le Mirail)
and the AUAT (Toulouse) . Finally, I would
like to thank the Department of the Environment and Nationwide Building Society for
providing much useful data on Berkshire .
Note
1.
These issues are currently being investigated
in the same case-study areas .
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