Housing markets can behave differently and follow different trajectories in different countries, but there can be similar or greater unevenness between different regions, cities and localities within the same country. In other words, there is a geography of ‘space’ and ‘place’ in the housing market, and that is true whether considering a snapshot of the state of the market at a point in time or a trajectory of development over time. These differences will reflect the uneven economic fortunes of different regions and cities—the runaway success of California’s Silicon Valley, contrasted with the decay and abandonment of Detroit and some other US ‘rust- belt’ cities, for example (Galster 2012). Economic activity and dynamism shifts over space, but housing is spatially fixed and supply adjustment is sticky—it is difficult to downsize a housing market rapidly, and it tends to involve unattractive features such as dilapidated or abandoned housing. For different reasons, much explored in later chapters, it is difficult also to expand housing supply rapidly, and perhaps especially so in an ‘attractive’ region.
Explaining geographical differences in economic performance and their cumulative nature is a whole discipline in its own right (economic geography), beyond our scope in this book. However, we are concerned with not just the effects on the housing market, which can be large, but also with highlighting one particular feature of the interaction between housing markets and regional/local economies. In general, markets have self-correcting properties, and in this case one might expect that high housing prices in favoured cities and regions would increase the labour and property costs for businesses to such an extent that they would relocate activities to cheaper locations, so leading to an equilibrium without massive and ever-increasing regional disparities. Whilst these processes do operate to some extent, the worry is that, because of the investment motive in housing, this might actually accentuate the disparities in the long term—managers and skilled workers want to maximise their housing investments and avoid the risk of getting stuck in a poorly performing region (see debates about home ownership and labour mobility in Blanchflower and Oswald 2013; Van Ewijk and Van Leuwensteijn 2009).
Geographical unevenness also applies at a finer spatial scale, at the level of districts and neighbourhoods within cities and regions. There is a conventional and well-understood set of relationships between housing and property markets and ‘space’, understood as the spatial relationship between particular points in space and key ‘attractors’ or features which affect the utility value of living at particular locations. As the subdiscipline of urban economics and its conventional tools such as ‘hedonic price models’ demonstrate, there are predictable relationships of house prices with distance from central business districts or other key destinations and transport hubs/networks, as well as with greenspace and other urban amenities located in close proximity (Leishman 2003). But it is clear that there are also other elements to the more elusive concept of ‘place’ which are also important—the quality of the architecture, the maintenance of the buildings and streets, the variety of buildings, their historical and cultural significance, the distinctiveness and variety of the shops and cafes, and the ‘ambience’ of the local public realm. Positive qualities of this kind can become part of a positive feedback loop through reputation, locational and lifestyle choices, so reinforcing a gathering strength of reputation for quality of life, or vice versa.
However, quality of place can be a double-edged sword. The ‘price’ of success is likely to be a rise in property values, which may price out some people and ultimately reduce diversity, whilst attracting commercial real estate developers or large retail chains whose bland products may reduce place distinctiveness. Processes of this kind, especially when actively encouraged and facilitated by planning and regeneration schemes, have attracted widespread criticism for promoting ‘gentrification’ (as mentioned earlier) and thereby excluding and expelling the poor and disadvantaged. There is much literature in human geography on this phenomenon, most of it highly critical (Smith 1996; Atkinson and Bridge 2005). However, a more nuanced view would be that processes of urban regeneration, involving physical investment and upgrading and some changes in the social composition of neighbourhoods are probably an inevitable part of urban life and bring with them a mixture of potentially positive and negative effects for different groups. The overall balance sheet will depend upon the circumstances, whilst the distributional impacts will depend upon the rights of the people affected, including in terms of housing tenure and welfare/social entitlements (including the existence of inclusionary housing programmes as discussed in later chapters), as well as collective rights to participation and voice in the planning process. A good example of this more nuanced debate may be found in literature assessing experience with the ‘Housing Market Renewal Programme’ in England between 2004 and 2010 (Ferrari and Lee 2010; Ferrari 2012; Lee 2013; Rosenfeldt 2013).