Housing is a first order problem but a third order question

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As you are reading this, you won’t need me to tell you that there is a housing crisis in England. Affordability is of most concern to London and the South while there are broadly issues attributed to lower demand in the North. Granted, these are sweeping generalisations and there is a fundamental local aspect – often at the street level – to housing. But the point is that the housing crisis is different in different places.

But let’s unpick the housing crisis. What is driving unaffordability in the South and say, vacant stock in the North?

Places only exist because people want to be there. This is their raison d’ètre. Without people wanting to be there, the place itself has no functional purpose. Quite simply, what makes a place (town, city etc) functional is its proximity to the labour market. So the first order question should be ‘where are the jobs?’

London is the powerhouse of job creation. A strong, growing global city competes not only with cities in England but also with world cities such as Paris, New York and Tokyo. This strength will attract people, particularly young people (it was ever thus), and the population understandably grows. And these people need to be housed. If a place isn’t able to compete on job creation nor (relative) earnings, the reason for being there will decrease. Don’t get me wrong, I am all in favour of attempting to rebalance the economy. But in its current form – highly centralised political system with little local power or budgets – it is difficult to provide competition to London.

But if this was the end of the story, then housing would simply be a second order question after jobs i.e. we’d only build houses where there are jobs. Infrastructure is the crucial bridge.

It isn’t enough to have a strong labour market nearby to be sufficient for a functional place. What makes St. Albans, Broxbourne and Brentford survive is their access to the London jobs market. Infrastructure investment on this scale opens up labour markets for people – increasing efficiency cuts down geographical distance, increases size of the labour market and provides new areas to live.

And what of northern cities? Cities such as Liverpool, Manchester, Leeds and Sheffield all had a strong purpose when they were job creators in the turn of the last century which helped boost places such as Oldham, Bury, Bradford and St. Helens. When this industry left, the places needed to find ways to create jobs and there needs to be access to those jobs. The (relatively long) time it takes to get from Manchester to Leeds or Liverpool to Manchester (or on a local level say from Blackburn/Rochdale to Manchester) restricts labour markets and people’s choice. If people here can’t find or access jobs, it should come as little surprise when they up-sticks.

From here, we can form better interventions to alleviate the housing problem. For some places, better infrastructure will provide better access, increased demand and increase in value. For others, new infrastructure can increase the amount of land that is available for housing development and provide more competition to bring land forwards more cheaply.

So housing is a crucial issue and one of necessity. But instead of jumping straight to the problem itself, we need to see the chain of events – first understand where the jobs are; secondly, how well people are connected to those jobs and; thirdly, where can we provide housing?

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One thought on “Housing is a first order problem but a third order question

  1. Pingback: Housing is a first order problem but a third order question | Shifting Grounds

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