Is the best route to more affordable homes via building better railways?
“Yes, sort of” is the answer from two economists. Their theoretical model may explain why many outer London boroughs have regeneration plans with a common theme: better transport.
Professors David Miles and James Sefton created an economic model to explain long term house price trends. They tested their model against real changes since 1870 in 14 countries. House prices around the world stay level with inflation until around 1950, then begin to rise and from 1970 soar ahead. The economists argue that commuter journeys times explain the change.
Why? Because faster commuting means more land is available where you can have a home and still get to work on time. Commuting speeds have not improved since 1970. Since then house prices have soared 300% above inflation. Supply and demand just can’t connect.
A practical way to test this theory is to build better transport links and so create more places where affordable homes can be built without huge subsidy. It turns out that an array of impressive new regeneration schemes led by outer London boroughs are testing this idea. In each case the schemes seek to create jobs and homes at the same time and trigger a virtuous spiral of growth.
Sutton LBC, The Institute of Cancer Research London and the Royal Marsden are launching The London Cancer Hub. They will draw high-skill jobs to the borough, creating an economic centre instead of a dormitory for central London. Beneath the biotech, they need the catalyst of better transport by extending the tram network across south London into the research centre.
Likewise, Barking and Dagenham LBC have plans for 10,800 homes in Barking Riverside. There has been a plan on paper for years. The finances only worked once they won backing to extend the railway to connect the land with jobs in the rest of London.
The masterplan for Brent Cross in Barnet intends to deliver 7,500 new homes and new businesses. Again, better transport is critical. New bridges and buses will reconnect the area to train stations in the surrounding area that had been inaccessible because of the motorway grid.
In Enfield, Meridian Water will be the site for 10,000 homes. And again, the finance works by exploiting the West Anglia trainline to bring homes and jobs closer together.
In each case outer London boroughs have come up with innovative ways to attract investment into their area. They are trying to unleash a virtuous spiral where homes and jobs forge one community. Behind the alchemy it looks as though better transport is the catalyst that starts the process. Maybe those professors are onto something.
Dick Sorabji, corporate director for public policy and affairs, London Councils