Urban containment, housing affordability and price stability - irreconcilable goals

Paul Cheshire

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: The planning goals of urban containment and now densification conceive of houses in terms of physical units and of land ‘supply’ as the area allocated for housing by the planning system; estimates of ‘demand’ are driven by household projections. Prices and price volatility are, however, determined by economic forces and there is a fatal mismatch between the operational concepts of demand and supply in markets and the parallel concepts with which the planning system works. Planning allocates a scarce resource – land – so is fundamentally an economic activity; but its decisions are made independently of price or market information. Moreover the concepts used by the planning systems vary with institutional arrangements and culture. Underlying these fatal clashes is the fact that housing is a complex good with many attributes, each of which is subject to particular supply and demand conditions and that one of the most important attributes of houses is space – both inside and around them. So the more planning systems attempt to densify development or to confine new housing to ‘brownfield’ land, the more inelastic supply of a vital housing attribute is, the more ‘unaffordable’ housing becomes and the more volatile housing markets will be. There are solutions - but none of them comfortable for policy makers.

JEL-codes: J1 N0 (search for similar items in EconPapers)
Pages: 20 pages
Date: 2009-09
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

Downloads: (external link)
http://eprints.lse.ac.uk/59240/ Open access version. (application/pdf)

Related works:
Working Paper: Urban Containment, Housing Affordability and Price Stability - Irreconcilable Goals (2009)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:59240

Access Statistics for this paper

More papers in LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library LSE Library Portugal Street London, WC2A 2HD, U.K.. Contact information at EDIRC.
Bibliographic data for series maintained by LSERO Manager ().