I have blogged on multiple occasions pointing to affordable housing as being one of the biggest threats to urban growth. In fact, it's a binding constraint on urban productivity and growth. This is the last one with links to the previous ones.
James Gleeson has an awesome awesome blog post (from 2018) on how Tokyo has managed to continuously keep adding to its stock of housing (HT: Noah Smith). Even as the rest of the country is depopulating, Tokyo prefecture has continued to grow, adding 940,000 people between 2005 and 2015 to reach 13.5 million.
Starts hit a peak of 192,000 in 2003 and a trough of 108,000 in 2009 but averaged 155,000 new homes over the two decades... In just a fifty year period Tokyo’s housing stock nearly tripled in size, from 2.51 million homes in 1963 to 7.36 million in 2013... Tokyo does demolish a lot of housing – between 2002 and 2011 there were 1.58 million starts but between 2003 and 2013 the stock grew by 1.17 million, so if we assume that it takes an average of two years from start to completion then it looks like 0.41 million homes were demolished in a decade, or about 7% of the 2003 stock. Put another way, roughly one home is demolished for every four new ones built. But the scale of construction still means that Tokyo’s housing stock is growing very fast – roughly 2% a year, about twice as fast as that of Paris, London or New York.
In general East Asian cities appear to have done far better than western cities in expanding housing supply.
In an FT article, Robin Harding puts Japan's housing achievement in greater perspective
In 2014 there were 142,417 housing starts in the city of Tokyo (population 13.3m, no empty land), more than the 83,657 housing permits issued in the state of California (population 38.7m), or the 137,010 houses started in the entire country of England (population 54.3m). Tokyo’s steady construction is linked to a still more startling fact. In contrast to the enormous house price booms that have distorted western cities — setting young against old, redistributing wealth to the already wealthy, and denying others the chance to move to where the good jobs are — the cost of property in Japan’s capital has hardly budged. This is not the result of a falling population. Japan has experienced the same “return to the city” wave as other nations. In Minato ward — a desirable 20 sq km slice of central Tokyo — the population is up 66 per cent over the past 20 years, from 145,000 to 241,000, an increase of about 100,000 residents. In the 121 sq km of San Francisco, the population grew by about the same number over 20 years, from 746,000 to 865,000 — a rise of 16 per cent. Yet whereas the price of a home in San Francisco and London has increased 231 per cent and 441 per cent respectively, Minato ward has absorbed its population boom with price rises of just 45 per cent, much of which came after the Bank of Japan launched its big monetary stimulus in 2013. In Tokyo there are no boring conversations about house prices because they have not changed much. Whether to buy or rent is not a life-changing decision.
The city's stock increase has been faster than its population growth, thereby resulting in a surplus of housing. This stock addition has been aided by demolition of older housing and replacement with high-rise apartments.
In 1963 there were 2.69 million households in Tokyo, and by 2013 this had grown to 6.51 million. So while the number of households grew quickly, the number of homes grew faster, and Tokyo went from having a crude ‘housing deficit’ in 1963 to a ‘surplus’ in 1973, and an even bigger surplus every year after that. By 2013 there were 849,000 more homes than households...
Tokyo illustrates... strategy: keep building more and more housing, far past the point of mere sufficiency and into the realm of abundance... The fastest growth has been in apartments, particularly the tallest ones (six storeys or more). In 1978 there were 823,000 homes in Tokyo in apartment buildings of 3 or more storeys. 25 years later there were 3.6 million. Over the same period the number of houses grew slightly while the number of low-rise apartments fell. All of this is consistent with a pattern of housing growth achieved primarily through densification rather than sprawl. That’s backed up by data on land use, which indicates that the acreage devoted to housing in Tokyo grew by around 1.5% between 2006 and 2011, whereas the number of homes grew by 9.2%. On average there are around 110 dwellings per hectare of residential land in Tokyo, compared to roughly 60 in London as of 2005.
It has also resulted in a sharp increase in per capita floor space availability despite the high density and population growth,
When you combine the average floorspace per home and the average number of people per household you get the below trend in average floorspace per person (this shows the space in occupied homes only – if you took vacant homes into account it would be much higher). The amount of space per person saw a remarkable increase from 15m2 in 1963 to 32m2 in 2013... in stark contrast to Tokyo there has been little or no increase in London in around 20 years.
Foremost, the housing stock increases have been aided by simple zoning regulations and central government involvement to address any problems of NIMBYism,
Japan has a relatively simple and unambiguous zoning code, one which the national government has repeatedly adjusted in order to allow for more housing growth in Tokyo. That has been done in the face of opposition at neighbourhood and even city level, opposition that in countries which have devolved land use decisions to a local level would be enough to stop densification or at least divert it to poorer areas.
Harding supplements,
Cities are zoned into commercial, industrial and residential land of various types. In commercial areas you can build what you want: part of Tokyo’s trick is a blossoming of apartment towers in former industrial zones around the bay... As bad loans to developers brought Japan’s financial system to the brink of collapse in the 1990s, the government relaxed development rules, culminating in the Urban Renaissance Law of 2002, which made it easier to rezone land. Office sites were repurposed for new housing. “To help the economy recover from the bubble, the country eased regulation on urban development,” says Ichikawa. “If it hadn’t been for the bubble, Tokyo would be in the same situation as London or San Francisco.”... All of this law flows from the national government, and freedom to demolish and rebuild means landowners can quickly take advantage. “The city planning law and the building law are set nationally — even small details are written in national law,” says Okata. “Local government has almost no power over development.”... Constant rebuilding helps to explain why housing starts in the city are so high: the net increase in homes is lower. Like our next-door neighbours, however, a rebuild often allows an increase in density... “The Japanese system is extremely laissez-faire. It really is the minimum. And it’s extremely centralised and standardised. That means it is highly flexible in responding to social and economic change,” says Okata.
Some observations:
1. The answer to affordable housing is simply to increase the stock. Build, build, and build. Create the conditions that allow for sharp increases in supply. And that means simple and flexible regulations, and institutional restraints on NIMBYism. The negative externalities imposed by NIMBYism should be countered with centralised mandates.
2. The extent of land in any city is fixed. Unlike other forms of capital, land is a natural resource. And the extent of land is a constraint on urban growth. There's therefore a case to regulate land use in a manner that maximises the housing supply. Aesthetics and conservation, while important, has to be balanced with the primary requirement of an expanded affordable housing supply.
3. Since land is more or less fixed, the only way to increase supply in any meaningful manner is to go vertical. So the need for policies that encourage vertical development and densification. Conversely, we may need to start thinking of policies that penalise low-rise and independent units.
So, for example, low-rise developments should be seen as imposing negative externalities and costs on society. Consider the carrying cost on the local infrastructure imposed by any land. A low-rise unit imposes a much higher per capita land area carrying cost, whereas an apartment unit has a lower per capita carrying cost. A stand-alone or low-rise development takes away from the market the full realisable potential of housing stock supply, thereby adding a premium to the average housing market price. This makes the case for higher property taxes and building permission fees for independent units and low-rise developments, and vice-versa for vertical developments.
4. Ease of redevelopment is critical to the success of any affordable housing policy. In fact, there's a strong case for incentivising the redevelopment of older properties that expands the supply of housing units. Come to think of it, any redevelopment of an older structure is most likely to result in an increased number of units. So, the greater the redevelopment, the more incremental supply. Such redevelopment policies should also make it easier to repurpose existing commercial and industrial land-use facilities into residential units.
In all these cases, policy should take care to ensure that the objective is affordable housing. As I wrote here earlier, left to itself (without policy guidance in that direction), easier building rules will only lead to gentrification and increased stock of large dwelling units.
5. Finally, it's important to shift the paradigm from focusing on land ownership to building rights. In most countries, while land belongs to the landowner, natural resources found in private lands belong to the sovereign and their extraction is tightly regulated. Extending this logic, it can be argued that the land owner's property right should be restricted to the specified building right that comes with the ownership of the land.
This idea is also legally enshrined in some countries like France where the land title confers only a basic building right, beyond which the owner has to purchase from the municipality. The French urban reform and land policy of 1975, Plafond Légal de Densité, was one of the first efforts to separate both these rights. It set building right at a FAR of 1 as part of property right for most of France except Paris where it was set at 1.5.
None of this should be taken to paint the picture of a city being a place filled with high-rises. For one, there should be enough community areas and green spaces. Instead of allowing the development of large sprawls, urban planners and policy makers should decongest cities by encouraging the emergence of satellite townships and newer cities interconnected to each other through good public transport facilities. The last, incidentally, is another important factor in Tokyo's success.
No comments:
Post a Comment