This is the headline in a recent blog post at the Adam Smith Institute – a ‘conservative’ think tank.
Goodbye, Green Belt!
Written by Sam Bowman Tuesday July 22nd 2014
And this is the thesis:
‘..I suggested we should allow construction on the Green Belt around London to increase the supply of developable land.
Land, as Paul Cheshire likes to point out, is the key. The graph above shows how closely house price rises have tracked land price rises. Land-use restrictions on the Green Belt are quite strict: under the National Planning Policy Framework, local councils face a very high burden of proof to approve new developments on Green Belt land. If they were made less strict, then the supply of land and housing would increase and the price of both would fall.
Profound analysis or cheap propaganda?
Well any explanation for a complex phenomenon which relies on just one or just one main causative factor us usually false or misleading. The cause of high house prices is just asserted to be land prices without any coherent logic. The circularity of the causation from house values back to land values is conveniently ignored. So to is the effect of mortgage lending and money printing at the Bank of England (so-called QE or Quantitative Easing) which has driven up the price of all financial assets. And the fact that we live in one of the world’s most open economies is just overlooked altogether.
Fine, so it is irrelevant that the money price of a house is affected by money liquidity and the availability of credit? And the fact that Greeks and Russians and Chinese and any affluent capitalist you care to name would like to have a pied a terre near civilised, cosmopolitan London and Heathrow airport where property rights are protected by a thousand years of Common Law and the Judiciary has been independent at least since 1689 has nothing to do with it? If you were a Russian and your property could be judicially stolen if you got on the wrong side of the President you might well see the merits of buying property in England. We run the best tennis tournament because it venerates tradition and rules and quaint ideas like ‘fair play’. Something similar applies to the way we run our economy. We don’t have that many players who win cups (although we still have proportionately more than statistically we should) but the rest of the world certainly likes to come and play the economic game here.
Only homeowners in the Green Belt support it – because it protects the value of their property
We may as well deal with some other innuendo in the Adam Smith blog. The people who support the Green Belt are disproportionately the people who own property there!
Another assertion backed by logic? Or more developer’s tripe?
On balance most property owners in the Green Belt might be financially much better off if the designation was abolished. To say that most home owners in the Green Belt are against building because it would negatively affect the value of their homes is a travesty. In fact the reverse applies. The property rights of home owners inside the Green Belt have been legally restricted for five decades by Green Belt designation. They cannot enlarge their houses much if at all and they cannot build on their gardens if it affects the ‘openness of the Green Belt’. If Green Belt restrictions were removed completely most home owners in the Green Belt would make a packet enlarging their houses, selling off bits of land – gardens or garages – or just selling out to a property developer.
Most people who live in the Green Belt have broader concerns than just the value of their houses. The Adam Smith Institute may be peopled with economic automatons whose only motive is money but people beyond its walls actually find it more heart-lifting to look at the beauty of nature than to admire a pile of banknotes.
Support for the Green Belt is hardly confined to people who own property inside it. Many come to the Green Belt from urban areas to enjoy the countryside- as originally intended by its creators.
Here’s another quaint idea from the Adam Smith Institute
“Allowing London to expand outwards would eat away at the Green Belt, but also allow more people to have gardens and for more (and bigger) parks to be built.”
Wisley Property Investments would agree with that one. That’s why it says it will create a ‘new Country Park’! Of course it does not point out that the only reason it is creating this park is because by law it cannot build on that bit of its site (35% + of the site?!) and by law it must create a “Suitable Alternative Natural Green Space”. Does it mention that the legal purpose of a Suitable Alternative Natural Green Space (SANG) is to divert the public away from the rare and endangered species inside the Special Protection Area (SPA)? Of course not! Because that would expose the inconsistency of having the SANG right up against the SPA!
So the Adam Smith Institute says that developing the Green Belt will give everyone a garden? Just take a look at the 2100 houses which the developer is going to put on 69 hectares. That’s a density of over 30 houses a hectare – not leaving any land aside for essential roads, parking, shops, schools etc. If this development is representative then Green Belt development is not going to create much garden space!
Is there really a shortage of land?
Or is it just a convenient presupposition to justify building on the Green Belt? According to the Campaign for Rural England (CPRE) there is enough Previously Developed Land or ‘brownfield’ land to build another 1.5 million new homes on.
Can existing infrastructure cope with new houses?
Anyone caught in traffic at a standstill on the A3 near Junction 10 would think this a relevant consideration. The Adam Smith Blogger does not mention infrastructure at all. It is apparent that current infrastructure is inadequate for existing houses – let along thousands of new ones.
And what about the effect of new taxes on house prices?
Successive governments have increased taxes on new homes . The public has not heard of most of them – Community Infrastructure Levy or CIL, the SANG levy, S106 money, affordable homes, etc, etc. All of these that are supposed to create “infrastructure”. Who pays these levies?– house buyers, not developers. And if the price of a new house goes up as a consequence, well so will the price of a “used” house. So house prices are also inflated by stealth taxes, which are being steadily increased.
And one last thing!
Go back and look at the chart. Marvellous evidence that chart. Really makes the point that you should build on the Green Belt!
Just one problem: it shows that house prices (which drive land prices and not the other way around by the way) are cyclical. And is the Adam Smith Institute suggesting that you should buy low and sell high? Look closely.
“Property prices must have fallen in 1974 and 1993 because the supply of land was increased. The money supply and interest rates had nothing to do with it”
Yah sure. Whatever it takes to get a planning permission.
Perhaps we should ask the Adam Smith Institute to try correlating London House prices with land prices on the ring roads around Shanghai. Perhaps it could interview the chinese families that have made fortunes buying a house outside each new ring road just as it is built?
Perhaps the Institute could explain why, if the ‘build houses’ theory of economic growth was the philosopher’s stone, the two European countries which built more houses in the last 20 years than in their entire previous history (Spain and Ireland) are still poorer than they were before the global financial crisis?