Debate Magazine

Gloriously Missing the Point About Housing Supply and Demand in London

Posted on the 20 July 2019 by Markwadsworth @Mark_Wadsworth

Shaun Bailey in City AM:
We need a bold new approach to tackle London’s housing crisis...
Since 2000, London has added over two million people, but has built fewer than 400,000 properties. Add in the surge of foreign money into our housing stock, plus more people living on their own, and you have an expensive – and exclusionary – mix.
The only way out of our current mess is to build, but politicians have promised to do that for years. While some have done better than others, every single one of them has failed to meet London’s actual needs.

The lack of self-awareness is staggering.
Those two million extra people moved to London from somewhere else, quite voluntarily, mainly attracted by the higher wages. For a given supply of housing, people will continue to move there until rents have risen to a level where the higher wages are cancelled out by higher rents.
If housing supply increases, rents might fall, very briefly. People who were previously deterred by the higher rents will move to London. Rents will increase to their previous level, probably within days or weeks.
Fair play to the lad, he seems to be recommending that London builds a lot more council housing for fixed rents. Let's assume they give priority to people who already live in London, this frees up private rented accommodation and people from elsewhere will move in to them, it makes no difference to the new arrivals.

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