Tuesday, October 7, 2014

Is deregulation really the answer for megacities?

Like a lot of people that like old cities and have an overly romantic ideal about Europe, whenever something pops up in my reading list that reinforces the idea i jump on it. But recently, I’ve read a collection of articles from slightly different views that point out how much work all of us (Europe, Asia and the USA) still have to do.

Karl Marx Hof, Vienna
Many months ago, I came across an old copy of Governing with a great article on public housing in Vienna, Austria. I was certainly jealous to read about how much of the market the Austrians had managed to corner and the great quality of housing that’s provided. Of course, this isn’t really a free market approach, and we’re talking about a city with more than 700 years of history. But all the same, it certainly helped feed my need to Euro-positive affordable housing appetite.

More recently, Next City has had a couple of articles about megacities and affordable housing. Janapese cities appear to be the most affordable of the megacities, included in the Demographia

The median price for a home in Tokyo and its surrounding three prefectures is 28 million yen, or around $270,000. With a price-to-income ratio (Median Multiple) of 4.4, it’s about as costly as Calgary, Nottingham or Sacramento. The greater Osaka area’s average home is just $180,000, giving it a Median Multiple of 3.5 and putting it in the same league as Chicago or Raleigh.

As a comparison, the three most expensive cities, according to Demographia, are Hong Kong (Median Multiple of 14.9, average home price of $4 million), Vancouver (10.3 and $670,000) and San Francisco-Oakland (9.2 and $705,000). The three most affordable are Pittsburgh (2.3, $116,00), Detroit (2.5, $130,000) and Grand Rapids (2.6, $136,000).

According to the report the driving factor for Japans affordability is continuing deregulation in the housing sector, which reduces development costs and provides the market more opportunities to meet the housing demands of ever growing megacities.

Now this goes against many of our common assumptions in the affordable housing field. For so many years we’ve talked about the need for governments and nonprofits to step into the market and meet the needs of low-income households that aren’t being met by purely market driven developers. In fact the concerns over affordable housing, at least in megacities, has even jumped onto the agendas of some Mayors for London and New York, among others.

But I’m not about to give up on all of my current opinions about how best to create affordable housing. I should note that the authors of the Demographia survey are not generally considered mainstream thinkers in affordable housing circles. In fact, Wendal Cox, runs a consultancy group that focuses on deregulating housing markets and pushes a car centric view of urban planning in general.

Regardless, the reports findings do point to some interesting facts that we should all consider in our planning and development work. Maybe the real question remains, what is the right balance between regulation and free market forces that will improve the affordability of housing for everyone?

Best aye,


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