Question
What are the main causes of the current housing crisis in London?
Answer
The housing crisis in London is a complex issue driven by multiple interrelated factors. Key causes include financialisation, inadequate housing supply, and policy failures.
Key Causes of the Housing Crisis
Financialisation and Investment Demand: The financialisation of housing, where properties are treated as investment assets, has significantly contributed to the crisis. This is compounded by credit liberalisation and money creation, which have increased housing demand and prices, making homes less affordable for average Londoners (Edwards, 2016; Gallent, Durrant and May, 2017; Beswick et al., 2016; Chng, Reades and Hubbard, 2023).
Inadequate Housing Supply: There is a consensus that London suffers from a housing supply problem, with the number of new homes being built insufficient to meet demand. This shortage drives up prices, exacerbating the affordability crisis (Dittmar, 2019; Chng, Reades and Hubbard, 2023).
Neo-liberal Policies and Deregulation: Over the past decades, neo-liberal reforms, including privatisation and deregulation, have worsened the housing situation. These policies have often prioritized market-driven solutions, which have not effectively addressed the needs of low- and middle-income residents (Edwards, 2016; Watt and Minton, 2016; Beswick et al., 2016).
Ineffective Government Policies: Past and current government policies have failed to adequately address the crisis. There is a lack of understanding and awareness in policy-making, and existing policies have not effectively improved affordability or increased the supply of social housing (Parmar, 2016).
Global Capital and Inequality: The influx of global capital into London’s property market has led to price distortions and increased inequality in housing access. This has made it difficult for local residents to compete with international investors (Beswick et al., 2016; Gallent, 2016).
Conclusion
The housing crisis in London is primarily driven by financialisation, inadequate housing supply, and ineffective policies. These factors have collectively led to increased housing prices and decreased affordability, affecting a large portion of the city’s population. Addressing these issues requires a multifaceted approach, including better regulation of investment demand, increased housing supply, and more effective government policies.
References
Edwards, M., 2016. The housing crisis and London. City, 20, pp. 222 – 237. https://doi.org/10.1080/13604813.2016.1145947
Gallent, N., Durrant, D., & May, N., 2017. Housing supply, investment demand and money creation: A comment on the drivers of London’s housing crisis. Urban Studies, 54, pp. 2204 – 2216. https://doi.org/10.1177/0042098017705828
Watt, P., & Minton, A., 2016. London’s housing crisis and its activisms. City, 20, pp. 204 – 221. https://doi.org/10.1080/13604813.2016.1151707
Beswick, J., Alexandri, G., Byrne, M., Vives-Miró, S., Fields, D., Hodkinson, S., & Janoschka, M., 2016. Speculating on London’s housing future. City, 20, pp. 321 – 341. https://doi.org/10.1080/13604813.2016.1145946
Dittmar, H., 2019. Urban Recycling and Doubling-Up: How Cities Really Respond to Growth. My Kind of City. https://doi.org/10.5822/978-1-64283-037-8_33
Parmar, S., 2016. An Analysis of the Affordable Housing Crisis in London. **.
Chng, I., Reades, J., & Hubbard, P., 2023. Planning deregulation as solution to the housing crisis: The affordability, amenity and adequacy of Permitted Development in London. Environment and Planning A: Economy and Space, 56, pp. 961 – 978. https://doi.org/10.1177/0308518X231209982
Gallent, N., 2016. Investment, global capital and other drivers of England’s housing crisis. Journal of Urban Regeneration and Renewal. https://doi.org/10.69554/glan8298
Baddeley, M., 2005. Housing bubbles, herds and frenzies: evidence from British housing markets, University of Cambridge, Dept, of Land Economy, Centre for Economic and Public Policy Brief, No. 02/05, pp.1-32.
Ball, M., 2013. Housing policy and economic power: the political economy of owner occupation. Routledge.
Ferrari, E. and Rae, A., 2011. Local Housing Market Volatility. York: Joseph Rowntree Publications.
Hodkinson, S. and Robbins, G., 2013. The return of class war conservatism? Housing under the UK Coalition Government. Critical Social Policy, 33(1), pp.57-77.
Malpass, P. (2009) Housing, Markets and Policy. Oxford: Taylor and Francis.
Pacione, M. (2005) Urban geography: a global perspective. Abingdon, Oxon: Routledge.
Pattison, B., Diacon, D. and Vine, J., (2010. Tenure Trends in the UK Housing Sector will the private rented sector continue to grow. London: Building and Social Housing Foundation.
Ricketts, S. and Field, D., 2012. Localism and Planning. London; Bloomsbury Press.
Tallon, A., 2013. Urban Regeneration in the UK. Abingdon: Routledge.
Whitehead, C. and Williams, P., 2011. Causes and consequences? Exploring the shape and direction of the housing system in the UK post the financial crisis. Housing Studies, 26(7-8), pp.1157-1169.
