Can Density Solve the Housing Crisis in Cities Like London?

Increasing density must form a key tenet of urban planning policy if cities are to tackle the pressure that migration is placing on housing, employment, and the environment, leading urban economist Edward Glaeser contends. Launching ULI Europe’s program of work on density and the urban environment, the Harvard University economics professor and ULI Trustee said restrictive policies on the growth of cities will be increasingly harmful.

During a panel discussion in London, Glaeser, author of Triumph of the City (2011), argued that despite advances in communications technology, face-to-face contact is growing ever more valuable, and urban density is vital to facilitating it.

“Remarkably, cities have come back,” he said. “We are a social species that got smart by being around other smart people.”

As an example of restrictive policies, Glaeser cited the urban land regulations in Mumbai, India. Designed on the assumption that smaller cities are more efficient than larger ones, Mumbai’s regulations have resulted in prohibitively expensive housing and growing poverty, he said.

Though a worldwide concern, density is especially crucial to the growth and productivity of European cities, where the relationship between GDP per capita and density is even stronger than in the United States, Glaeser argued.

The link between urban density and GDP has been a controversial issue among urbanists in recent years, following the publication of research that denied any such relationship exists and contended that productivity rises simply as a function of higher populations.

But Glaeser said statistics show that the densest 10 percent of America’s counties have income that is 50 percent higher than in the least dense half. “The three largest metropolitan areas in America produce 18 percent of America’s GDP while accounting for 13 percent of America’s population,” he added.

Citing urban writer Jane Jacobs’s activism about protecting New York neighborhoods from development, Glaeser said, “You only have to look at Greenwich Village, which has been frozen in amber as a historic preservation district, to see a place that has gone from being affordable to a place where townhouses start at $8 million.”

London, in particular, needs to accept trade-offs in historic urban areas if it is to pursue growth, he said, because the promotion of affordability is incompatible with the preservation of heritage buildings.

He also criticized the United Kingdom’s failure to submit land use regulations to cost/benefit analyses as an “appalling state of affairs.” Since 1947, Britain’s system of land use planning has aimed to contain urban sprawl by using restrictions on the supply of land for residential, retail, office, and industrial development.

“We should apply the same cost/benefit analysis to these regulations that we do to transports projects,” Glaeser said. “Think what the U.K. went through with the Crossrail [budget]. That was necessary, but land use regulations are even more powerful in shaping cities.”

“When you have demand and a fixed supply, prices can explode,” he added. “It is a big problem; ordinary people can’t afford to live in our great cities.”

Fellow panelist Michael Spies, senior managing director of international real estate firm Tishman Speyer, concurred with Glaeser, saying responsible development over the coming century requires a clear analysis of the priorities assigned to heritage.

London needs to face this issue to facilitate growth, he said. Spies recommended that the city review the protection it provides to the city’s views of key panoramas and heritage sites by limiting building heights. “Heritage is wonderful and London has preserved it in many wonderful ways, but some places require a telescopic lens to see some of the viewing quarters that have been established,” Spies said.

The restrictive policies have led to uneven patterns of development and underused areas of the city, he argued. “London is not a dense city in relation to global cities. What is called for is for us to recognize that to grow is out and up. You can’t, or shouldn’t, have very low development within walking distance of train stations or bus transport.”

Martin Wolf, chief economics commentator at the Financial Times, said the combination of 30 years of restrictive planning with recent income growth and immigration is “generating a true social and economic disaster” in London. “When we have got such a massive affordability crisis for young people, liberalization should apply on intensive and extensive margins. We should think about building out and up, higher and wider,” he said.

Wolf argued that development is needed on the margins of cities to tackle the housing crisis, particularly in the U.K. capital, where an estimated 50,000 new homes each year will be required to keep pace with the rising population.

A case can be made for planning preemptive activity in London’s green belt, the currently protected rural area on its perimeter, he said. London Mayor Boris Johnson has ruled out building on green belt land until at least 2025, saying brownfield sites should provide sufficient land for development.

“So,” Wolf countered, “the U.K. wants economic growth but no urban development, wants a market economy but not in land, wants immigrants but doesn’t want to build houses they need. Policy needs to [liberalize], but vested interests are such that it is hard to see that happening.”