How do parental background and local house prices influence young adults’ homeownership in England and Wales?

Rory Coulter, University of Cambridge, rcc46@cam.ac.uk

http://usj.sagepub.com/content/early/2016/09/22/0042098016668121.abstract

Successive British governments have committed themselves to improving social mobility and increasing homeownership. However, declining rates of owner-occupancy amongst young people – attributed in part to the financial constraints imposed by high house prices and hefty mortgage deposit requirements – now threaten both of these objectives and raise the spectre of deepening housing inequality. 

Debates about Generation Rent suggest that the age distribution of housing resources is becoming more unequal as young adults are finding it harder than previous generations to ‘get on the housing ladder’. Moreover, the growing financial difficulty of accessing homeownership could be deepening housing disparities between young people by lifting owner-occupation out of reach of those whose parents cannot afford to provide housing assistance (for example through financial transfers or mortgage guarantees, help with big ticket purchases or free/subsidised accommodation). This could exacerbate the intergenerational transmission of wealth and (dis)advantage, especially in places where house prices are high and it is particularly difficult to enter homeownership.

To examine these issues I enriched the Office for National Statistics Longitudinal Study of England and Wales with new data on average transactional house prices within Local Authority Districts. I then analysed how parental attributes predicted the probability that young people aged 25-34 in 2011 were homeowners, exploring whether these patterns varied with local house prices. 

There were two principal findings:

1. Children with more socio-economically advantaged parents are disproportionately likely to become homeowners, even after taking into account that young people lead very different types of lives (for example in terms of educational attainments or employment patterns). Disparities in the odds of homeownership between children from more and less advantaged backgrounds are also somewhat more pronounced in areas with higher house prices where fewer young people are owner-occupiers.
   
   
2. Nevertheless, individual factors like qualifications, family type and employment are generally more potent predictors of young adults’ homeownership than parental background or local house prices. Parental factors and local prices also only strongly stratify the homeownership prospects of those more advantaged young people whose life trajectories are conducive to owning. Less advantaged young people are unlikely to become homeowners regardless of local prices or the socio-economic status of their parents. This means that housing policy interventions such as Help to Buy are unlikely to create a more socially mobile housing system unless the intergenerational transmission of (dis)advantage in other areas - such as the education system and labour market - is also addressed.

Going forward, this new evidence about the multiple factors constraining young adults’ homeownership indicates that improving the housing experiences of less advantaged young people requires policy-makers to look beyond social mobility and ownership oriented initiatives. As many young people are prolonging their education and grappling with student debts and a lack of secure well-paid work, interventions to improve young adults’ everyday quality of life need to also target the rental sector. This is important because a lack of social housing means that many young people who cannot or do not want to enter homeownership currently have to remain in the parental home or rely on weakly regulated private rental accommodation that is often relatively more costly, insecure and of poorer quality than housing in other tenures. 

Special Issue: Urban land and conflict in the global South

Melanie Lombard, University of Sheffield, UK
Carole Rakodi, University of Birmingham, UK

http://usj.sagepub.com/content/53/13.toc

Xalapa
Photo: Melanie Lombard (2007)

2016 is a significant year for the global urban development community. In October, the third Habitat conference will be held in Quito, Ecuador. Elaborate preparatory processes have aimed to ensure that the conference tackles the issues most crucial to the achievement of equitable, efficient and sustainable urban growth and management. During the conference, it is hoped that delegates from all the UN member countries will agree a Declaration on Sustainable Cities and Human Settlements for All, setting out a new global urban agenda. Yet, arguably, land, and particularly conflict over land, should be more central to the deliberations and the agenda itself. 

In cities of the Global South, access to land is a pressing concern. Typically neither states nor markets provide suitable land for all users, especially low-income households. In the context of urban growth and inequality, acute competition for land and the regulatory failures of states may result in violent conflict. Conflicts over urban land undermine land management and planning systems, add to bottlenecks in the court system, and may lead to violent clashes if unresolved. Policy measures such as registration or improved land use planning are often justified, amongst other things, on the basis that they will help to reduce land conflict. 

However, most accounts refer to such conflicts only in passing. The dynamics of conflict related to urban land are rarely examined in depth, perhaps because it is risky to do so. For example, the Habitat III issue paper on urban land refers to the impact of internal displacement on urban areas, the need to protect rural landholders’ rights in peri-urban areas affected by urban expansion, and the increased competition for land following sea level rise, but none of these are examined in any detail.

The draft New Urban Agenda, which has already undergone several iterations at preparatory meetings, refers briefly to the effects of land conflicts arising from informal settlement integration and wider civil conflict. In addition, several of its recommended ‘development levers’ (policies and actions) relate to land, such as planned city extension. However, the possibility that conflict over land might undermine policy implementation is not recognised. Meanwhile, the 2016 report Urbanization and Development – Emerging Futures, which identifies key implementation issues for the New Urban Agenda, refers to conflicts arising from urban inequality and redevelopment, but does not contain a specific chapter on land. Such omissions are surprising, given that equitable access to, and sound management of, land is central to transformative change. They make the publication of this special issue of Urban Studies very timely. 

The publication originated from the authors’ shared frustration at the lack of thorough understanding of urban land conflict, particularly in terms of the actors involved, the relationships between them, the role of land administration systems and the efficacy of existing conflict resolution mechanisms. A key concern is that policies and practices intended to reduce conflict over land have the potential to exacerbate it instead. These points are addressed across the papers in this special issue, which are based on ground-breaking research in challenging contexts including Xalapa, Mexico; Juba, South Sudan; Nairobi, Kenya; and eThekwini (Durban) and Johannesburg, South Africa. 

Our editorial introduction sketches out a framework for land conflict analysis. We suggest that such analysis must, first, consider definitional categories, including the material and emotional dimensions of access to land, conflict and violence, and tenure. Second, it needs to identity and examine the interests and behaviour of the many actors involved in land conflicts. And third, it needs to analyse the interactions and relationships between those involved at different levels: from the individual/household, through the local to the citywide, national and international. It is only from such grounded and detailed research, exploring the drivers, dynamics and outcomes of urban land conflicts, that well-informed, appropriate policies and practices will arise.

Powering Africa’s Urban Revolution

Jonathan Silver, Durham University, UK
Simon Marvin, The Urban Institute, University of Sheffield, UK

http://usj.sagepub.com/content/early/2016/09/27/0042098016668105.abstract

The pace of change in some sub-Saharan African towns and cities is relentless. In Lagos thousands of people arrive everyday to establish new lives, economic opportunities and social connections. Many of these new arrivals will find space in the informal settlements that make up to 60 percent of the population in cities such as Kampala. Urbanisation is taking place on a scale unmatched in human history and its creating an urgent need to produce new infrastructure systems to serve the needs and dreams of these growing urban populations. 

The energy challenges of these cities form only one part of this infrastructure agenda - but one vital to the futures of these urban regions and their inhabitants. The energy issues of powering what Sue Parnell and Edgar Pieterse (2014) term ‘Africa’s urban revolution’ are complex and ever changing across the multiple, urban geographies of this vast region. From mega-infrastructure projects such as the $20 billion Grand Inga hydro in DR Congo to the everyday struggles of energy poverty in households in Cape Town it’s clear that multi-scalar energy transitions are taking place alongside the broader infrastructural transformations of the region. But how such transitions are taking place across towns and cities and how these socio-technical processes might be guided around concerns such as sustainability or security remain less clear. 

Solar panels for sale in a market in Timbuktu
Photo: Jonathan Silver

It is this uncertainty concerning the trajectories of energy transitions and how they are understood that has provided the impetus for our critical commentary. We have been working for a number of years with an international team based across Ghana, South Africa, Uganda and the UK as part of the SAMSET project (Supporting African Municipalities in Sustainable Energy Transitions). The work of researchers, practitioners and municipal partners has shown that understanding this energy transition is complex and varies across different urban, national and regional contexts. Furthermore, they also offer very different outcomes to the infrastructuralisation that occurred during electrification in the global North. As such we have taken inspiration from the growing literature on postcolonial urbanisms, particular across sub-Saharan Africa to consider these urban energy transitions in ways that are more applicable to the regional dynamics of (urban) infrastructure.

Electric pylons cross the Joe Slovo informal settlement in Cape Town
Photo: Jonathan Silver

Beginning with debates concerning urban transitions analysis we then propose extending the outlines of such a framework into new directions that address our concerns about how we research the energy dynamics of ‘Africa’s urban revolution’. Here we seek to draw attention to the specificity of sub-Saharan African urbanisation, the need to find an ‘urban’ context for understanding transition, how urban capacity is constituted and might be rethought and finally the politics and contested natures of these transitions. Our conclusion argues that we need new ways to interpret and explain urban energy issues as a basis for critical social science research that better accounts for actual existing urban energy conditions. Such research is vital to connecting with, informing and partnering with the world of practice through helping a range of intermediaries, from municipalities to slum dweller groups better grasp these energy challenges.

One way we have done this is to take our ideas and concerns from this critical commentary to inform a new short documentary made in an informal settlement in Kampala with our research assistant Joel Ongwec - Powering Namuwongo - an examination of energy transition in an poor but vibrant neighbourhood in Uganda’s capital city.

Empty spaces in the crowd: Residential vacancy in Sao Paulo´s city centre

Vanessa Nadalin, IPEA - Institute of Applied Economic Research, Brazil

http://usj.sagepub.com/content/early/2016/09/14/0042098016666498.abstract

The issue of higher residential vacancies in the city centre has been relevant in the case of São Paulo, Brazil for quite some time. In fact, since 1997, social movements have been promoting squatting in empty central buildings, aiming to convince the government to use these vacant properties as social housing. Nowadays, these social movements play an important role even in national politics, with great power over street protests mobilisation.

Homeless people claim affordable housing at Avenida Paulista 
Foto: Marcelo Camargo/Agência Brasil (11/12/2013)
(Licença Creative Commons Atribuição 3.0 Brasil)

São Paulo is a wealthy city with respect to the rest of the country. It has been the centre of Brazil's industrial development. Still, the high income inequality implies a great concentration of poverty. The fast pace of urbanization during the 70s and 80s contributed to the fact that São Paulo is a huge disorganized urban area. Urban problems are everywhere: housing deficit, traffic congestion, violence.

The effort in attracting jobs and maintaining economic activities in the inner city is particularly challenging. Indeed, even if many cities have successfully regenerated their central areas, the so-called inner city problem is still very much alive in São Paulo. As a result, although the city centre has abundant urban infrastructure, it still has plenty of vacant spaces, including residential buildings. One could say that São Paulo’s city centre is characterised by a large number of empty spaces in an area that is simultaneously crowded with buildings and urban facilities.

A 1960 building that houses 378 squatting families in São Paulo city centre
Foto: Marcelo Camargo/Agência Brasil

The ‘housing deficit’ in São Paulo´s urban area amounted to 694,042 units in 2010, whereas there were 476,112 vacant residential units in total (IBGE 2010 Census). This significant housing deficit indicates the need to seek alternatives in the provision of good quality housing and, clearly, the reduction of residential vacancy rates in the city centre might be an option. Nonetheless, to assess whether this is a sensible approach it is important that vacancy levels are monitored and their underlying drivers understood.

Residents of squatted building take turns in cleaning common areas
Foto: Marcelo Camargo/Agência Brasil

Our research intended to contribute to the empirical analysis of the determinants of vacancy rates, with a particular focus on historical city centres, using the Sao Paulo Metropolitan Area (SPMA) as our case study. Our empirical analysis relies on district-level data for the years 2000 and 2010, and combines standard spatial econometric methods with hedonic modelling.

We find evidence of three main groups of determinants: individual building characteristics, mobility of households and neighbourhood quality. There is also evidence that the historic central city is a distinctive submarket and its determinants work differently when compared to the housing markets of other areas across the SPMA. 

The empirical vacancy determinants indicate ways in which policy makers could interfere to change market conditions and improve the provision of good quality housing.  In general, one might think of policies that aim to reduce the natural vacancy rate or, alternatively, measures with the objective of correcting upward deviations from the natural vacancy level. For instance, the enforcement of laws that punish owners for keeping units vacant can influence and expedite the price adjustment process.

Regeneration and networks in the Arts District (Los Angeles). Rethinking governance models in the production of urbanity

Dr. Sébastien Darchen, University of Queensland, Australia

http://usj.sagepub.com/content/early/2016/09/22/0042098016669917.abstract

Cities are more and more analysed as being part of broader urban networks. But does the context of a network society – as defined by Manuel Castells – have an influence on local planning processes? The literature on networks is rapidly expanding; yet urban scholars know very little about the influence of this context on the micro-politics of planning. More research is needed on the ways urban stakeholders use specific networks to influence the evolution of a given urban area. Associated with this challenge of rethinking governance models, is the need to answer the following question: Who is in charge of the production of urbanity in the contemporary city? Conventional top-down planning has become difficult to achieve and interactive forms of governance supplement traditional government institutions and representative democracy (Sehested, 2009). This context broadens opportunities for new non-institutionalised social actors to play an active role in current planning processes.

This research studies the regeneration strategies of a group of non-institutionalised stakeholders in the Arts District in the downtown area of Los Angeles. In the absence of real engagement from institutionalised actors, this group of new entrepreneurs (e.g., Creative Spaces, Linear City, business owners) has developed an innovative regeneration process based on the adaptive re-use of industrial buildings. Adaptive re-use can be defined as “a process to ameliorate the financial, environmental and social performance of buildings...that changes a disused or ineffective item into a new item that can be used for a different purpose” (Bullen and Love, 2010: 215).

This process involves the creation of socially responsible new businesses and work spaces for artists (see picture below), as well as for companies from the creative sector. 

An abandoned industrial building transformed into an exhibition space for artists
Source: The author

The regeneration process relies very much on professional networks; the group of new entrepreneurs is active in enrolling actors outside the District in the regeneration process. They use their professional networks at the national scale to attract residents and businesses from the creative sector in the Arts District. This enables them to retain an element of creativity in the neighbourhood and to promote an innovative regeneration process based on the adaptive re-use of industrial buildings. The research highlights the use of social networks and “spaceless” interactions active in the production of contemporary urbanity. Furthermore, this research encourages urban scholars to look beyond endogenous interactions to consider the external networks that contribute to the transformation of a given urban area.

References

Bullen PA and Love PD (2010) The rhetoric of adaptive reuse or reality of demolition: views from the field. Cities 27: 215-224.

Castells M (2009) Communication Power. Oxford: Oxford University Press.

Sehested K (2009) Urban Planners as Network Managers and Metagovernors. Planning Theory and Practice 10(2): 245-263.

The local distribution of endowments matters: Modelling tax competition with heterogeneous local residents

Dae Jin Kim - University of Seoul, Korea
In Kwon Park - University of Seoul, Korea


http://usj.sagepub.com/content/early/2016/09/08/0042098016665941.abstract


The Korean central government introduced a property tax hike in 2004 as a redistributive policy, bringing as high as a 200% increase in the property tax. This action brought about dynamic interactions between the central and local governments and between local governments, particularly in Seoul Metropolitan Area (SMA). We found that in these interactions the SMA residents were very sensitive to the tax policy of the progressive central government, and acted as home-voters as Fischel (2001) argued. The owners of highly valued home especially opposed the policy and supported the property tax cuts by their local governments, because the residential estate asset was the most valuable one of only a few assets they owned. Local governments competitively responded to their constituents in the form of property tax cuts for the pre-electoral competition (Downs, 1957).


What attracts our attention in this occasion is that the local distribution of home values matters in the race of tax cuts. Home owners’ movements against the property tax hike were observed more frequently in the communities with relatively left skewed distributions of home values. Since the proportion of relatively upscale homes is larger in those communities than in others, more home owners there prefer a low property tax rate. The existing literature on tax competition, however, does not take into account the distribution of resource endowments, but assumes that local residents are homogeneous in endowments. Given this gap between the reality and the literature, we approach the tax competition of the SMA with the viewpoint of public choice, constructing a model with heterogeneous individuals in resource endowments. 


This study bases inter-local tax competition on local governments’ behaviours of maximising the utilities of tax payers with different economic conditions. The difference in labour and capital endowments of individuals brings the pre-electoral competition about the property tax rate or political actions by home owners, which in turn affects the tax competition. The median voter theory suggests that the local government in this case responds to the median voter’s preference to gain a majority of constituents’ supports as the median represents the majority. Our theoretical model incorporates this theory into the tax competition framework, and predicts that the local distribution of resource endowments affects not only a municipality’s decision on the tax rate but also the sensitivity to its neighbours’ tax cut. We employed the spatial panel analysis to test the theoretical model. A panel dataset for the SMA municipalities in 2004-2006 are used for the empirical analysis. The empirical analysis verifies the two main expectations as follows.


First, the results of spatial econometric analyses consistently indicate a positive interdependence of the property tax rates among municipalities. This implies that positive-sum tax competition in the SMA occurs: holding all other things constant, if one local government cuts the tax rate, others also cut the tax rate strategically. Also, this reaction pattern is stronger as local jurisdictions are closer to each other. These results confirm that the Tiebout’s (1956) tax competition theory is valid for analysing the strategic tax interaction among local governments. It is meaningful in that despite abundance of discussion on this topic, there are not many empirical studies supporting the theory with rigorous methods as in this study (Brueckner and Saavedra, 2001).


Second, the local distribution of resource endowments, as measured by skewness of home value, affects the property tax rate and the spatial dependence of tax rates respectively. In a municipality where a majority of constituents are relatively highly endowed, the local government is more likely to adopt a lower tax rate (choosing a higher tax cut) to gain the majority’s supports. As high-priced home owners, they prefer a low property tax rate, making the local government cut the tax rate in response. This confirms the theoretical prediction of the previous studies of pre-electoral competition (Downs, 1957; Persson and Tabellini, 2000; Borck, 2003). The municipality is also more sensitive to its neighbouring municipalities in the race of tax cut. Because the majority of its constituents watching tax cut dominoes of the metropolitan area push the local government to cut its tax rate, it is more likely to participate in the tax cut race. These findings support that the pre-electoral competition of the property tax has an impact on the spatial dependence of tax rate choices by local governments as well as the local government’s internal decision making on the tax rate. 


In sum, this study theoretically elaborates that the local distribution of resource endowments affects both the level of tax rate and the degree of sensitivity in tax competition, and empirically confirms the theory using a panel dataset for the SMA municipalities. The novelty lies in the fact that we incorporated the heterogeneity of individuals’ resource endowments into the tax competition framework both in the theoretical and empirical models. The results also underpin the median voter theory which has been rarely tested with reliable statistical methods despite its reputation as the most widely known theory of public choice.


References

Borck R (2003) Tax competition and the choice of tax structure in a majority voting model. Journal of Urban Economics 54:173–180.

Brueckner JK and Saavedra LA (2001) Do local governments engage in strategic property-tax competition? NationalTax Journal 54(3): 231-253.

Downs A (1957) An economic theory of political action in a democracy. The Journal of Political Economy 65(2): 135-150.

Fischel WA (2001) The Homevoter Hypothesis: How Home Values Influence Local Government Taxation, School Finance, and Land-Use Policies. Cambridge, MA: Harvard University Press

Persson T and Tabellini G (2000) Political Economics: Explaining Economic Policy. Cambridge, MA: MIT Press.

Tiebout C (1956) A pure theory of local expenditures. The Journal of Political Economy 64(5):416-24.

A hyperbolic paraboloid interpretation of residential relocations in U.S. metropolitan regions

Hossein Estiri, Harvard Medical School, USA

http://usj.sagepub.com/content/early/2016/09/14/0042098016668783.abstract

Hyperbolic paraboloids (Figure 1) have always been the most fascinating geometric forms to me. They are simply quadratic surfaces from cross-section of a hyperboloid and a paraboloid. Not so simple? They are often called “saddles” and have been widely used in architecture – Sagrada Família nave roof by Antoni Gaudí, a well-known Spanish Catalan architect, is an illustrious example of the use of hyperbolic paraboloid forms in architecture.

Figure 1: A hyperbolic paraboloid from two different angles



Have you seen a demographic theory described with a hyperbolic paraboloid? That’s what we did in this article (Figure 2)! The Cohort Location Model (CLM) is a simple approximation of how we distribute across metropolitan areas (in the U.S., at least), based on age of the household head.

Figure 2. The Cohort Location Model – for more details read the article in Urban Studies

For years, demographers have tried to explain why we live where we live – from now on let’s abbreviate the phrase to: [WWL]². We tried to simplify [WWL]² by combining 2 assumptions about our housing consumption and land use patterns. First, we assumed that as we become older, our expectations from (or needs for) where we live increases – e.g., we need more home space, more neighborhood amenities, etc.). There is, by the way, scientific evidence for this assumption. For example, Jake, an imaginary college student in his early 20s, can live in a shared 4-bedroom unit that was built in the 60s and is not conveniently located with respect to healthy grocery stores. Many of us have lived like Jake. It is fun, for Jake and his cohorts though.

But 10 years later, when Jake is out of school, has a spouse, and has just welcomed a new addition to his family (a kid), things change. Now he needs more space, and access to a lot of neighborhood services, all of a sudden matter to him. We found that age of 35 is about that time. Now this about 35-year-old former college student is seeking to relocate – probably to his first owned home in a decent neighborhood for his growing family.

The CLM says that the 35-year-old Jake most likely will end up going to the suburbs. This residential relocation pattern, according to our assumption number 2, is partially due to the land use patterns in the U.S. (i.e., the widespread suburbanization).

Those nice neighborhoods close to the city center(s) are way above Jake’s budget. This is probably the story of many young adults in the American metropolis these days. Our model follows Jake each 10 years until he is above 84. We think at some point Jake will either come back closer to the city center(s) – either will be able to afford to live in one of those nice central city neighborhoods or reduce his expectations to live closer to some important services – or will decide to go further out to get more natural amenities.

The pattern CLM presents will probably be different in other countries. But, I bet it will still be a hyperbolic paraboloid, if you do a linear approximation. We have made this research reproducible. Plug in your data into our code on GitHub (https://github.com/hestiri/hhLocation) and let’s see what kind of hyperbolic paraboloid you will get.