Owen Jones has a video up at The Guardian on the evils of property developers. He blames them for pricing people out of their homes, but I think he’s wrong. Sure property developers are building unaffordable housing, but that’s because land is unaffordable. When land is unaffordable it makes sense to build the most expensive property you can to make the best margin you can.
In the 1930s in the UK’s recovery from the Great Depression and terrible twenties Property Developers went wild. Just like today people responded to low interest rates by investing in housing. The problem is the 1930s saw housing built that people could afford and that people liked, today low interest rates push prices go up. It was the opposite in the 1930s. As Nick Crafts explains “85% of new houses sold for less than £750 (£45,000 in today’s money). Terraced houses in the London area could be bought for £395 in the mid-1930s when average earnings were about £165 per year.”
Why was this? Is wasn’t out of the benevolence of 1930s property developers, it was because the supply of land was far less regulated. There was no incentive to sit on land and even affordable housing becomes an attractive investment when land is easy to come by. Property Developers were just as selfish then but the system channeled that to something useful. The Second World War stopped this housing boom and the 1947 Town and Planning Act made sure it never came back.
In fact, get the rules right and property developers could go from enemies to heroes. Housing expanded so quickly in the 1930s it was the primary motor pulling Britain out of its long slump. Sound familiar? That could happen today, we just need to make it much, much easier for people to use land how they want, where they want.
PS Owen talks about India too. Slum residents (not owners) are cleared out of their slums so they can be redeveloped as better quality housing. This really is something to be angry about. People without deed to their property getting expropriated by developers working (probably) with corrupt local government. This is awful and I don’t have a good solution to this, primitive accumulation accompanies the early stages of capitalist development everywhere. Solutions on a postcard please.