Controlling the Housing Land Market: Some Examples from Europe

Abstract

One major problem for the production of low-cost housing in the UK is the continued lack of control over the market for housing land, yet there is very little debate about ways of controlling land prices. This paper assesses some alternative approaches to land-use planning by focusing on high growth sub-regions in Britain, France and Sweden. It examines the flexibility of these planning systems to changes in the demand for housing land and the relationship between land release, land prices and house prices. The paper argues that the British approach is subject to a high level of uncertainty, exacerbating risk-taking speculative behaviour and price inflation. Under the French system, development uncertainty is reduced and house prices more rigidly controlled, with the result that speculative behaviour is constrained. The Swedish system is dependent on the ability of local authorities to build up land reserves which act as a buffer against price inflation. However, pressure on land prices in the open market has made this approach increasingly hard to sustain.