THE IMPACT OF URBAN REGENERATION ON LOCAL HOUSING MARKETS A CASE STUDY OF LIVERPOOL

Pavan Mehta ABSTRACT Urban regeneration is a process to improve economical, physical, social and environmental condition of an area. After Second World War many regeneration initiatives were introduced by different political parties to achieve sustainable development in the United Kingdom. Housing has been one of the main focussed concerns amongst the initiatives due to the basic need of mankind since then. But, housing is different from other commodities due to the distinguished characteristics, which creates housing market more complex. The gap between demand and supply makes housing market in disequilibrium. Regeneration deals with the low demand in the deprived neighbourhoods. There are many national, regional and local issues that lead to the low demand of housing. Liverpool is one of the most deprived cities in the United Kingdom and is seriously affected by low demand and many other social and economical issues. No doubt, regeneration aims for better and positive results in an area but, it is not simple to carry out this process without understanding its (positive as well as negative) impact on an area and more importantly to the people who live there. Keywords: urban regeneration, housing market, Liverpool, impact of regeneration

I. Introduction Change is the most permanent thing in the world. It could be physical, environmental, economical or any other type. Regeneration stands for the change and is also a process. In other words urban regeneration means physical, economical, social and environmental change in a city/ town/ area. Regeneration basically covers these four aspects, covering everything of an area - such as community, crime, infrastructure, employment, health, literacy etc. Each aspect is interrelated with another and has its own direct or indirect impact on other aspects. So, regeneration does not include any single or individual aspect or person but it includes all the aspects and everyone who lives in that particular area, which should be taken care of for the sustainable development. For example unemployment can create many issues related to health and safety (crime). If, unemployment is taken care of in a conurbation then automatically to some extent it will lead to a healthy and safe conurbation and vice versa. But, it is not simple to carry out this process without understanding its (positive as well as negative) impact on the area and more importantly to the people who live there. Gentrification is one of them. The concept of Urban Regeneration was established after the Second World War. During the Second World War there was virtually no house-building, and 208,000 dwellings completely destroyed, 250,000 made uninhabitable and over 250,000 seriously damaged (equal in total to 5 per cent of the housing stock). As much a 33 per cent of the stock had been damaged and, together with the rest, remained largely unrepaired or unmaintained throughout the six years of the war. (Balchin, P. and Rhoden, M., 1998, pg. 89) After the Second World War major demolition work took place to remove slums from the city. After this the Government moved towards improvement of housing rather than demolishing it. New issues were started emerging in the end of 1960s such as problems of 1

economic restructuring, growing urban deprivation, social exclusion, physical obsolescence and environmental degradation. British cities were among the earliest in Europe to experience this wave of economic restructuring and social change, partly as a result of poor industrial competitiveness, outworn infrastructure and social tensions in the inner cities (Couch, Fraser, Percy 2003) Many of the UK cities have faced a wave of this blight after 1970s. The main reason was de-industrialisation coupled with suburbanisation. Many of the cities have suffered from tremendous population loss during last four decades. The initial definition of urban regeneration is based mainly on following themes: the relationship between the physical condition evident in urban areas and the nature of the social and political response; the need to attend to matters of housing and health in urban areas; the desirability of linking social improvement with economic progress; the containment of urban growth; the changing role and nature of urban policy.

These themes define urban regeneration as: comprehensive and integrated vision and action which leads to the resolution of urban problems and which seeks to bring about a lasting improvement in the economic, physical, social and environmental condition of an area that has been subject to change. (Roberts, P. and Sykes, H., 2000 pg. 10-17) Edgar, B and Taylor, J, mentioned that new housing can be a driver of urban regeneration, and decent housing is an essential ingredient of any regeneration scheme. Decent housing stimulates both physical and economic improvement, and the resulting enhancements in turn stimulate new investment and new opportunities as the urban environment once again becomes full of life and enterprise (Roberts, P and Sykes, H. 2000). II Housing Market Housing is a commodity and heterogeneous in nature due to many factors such as location, environment, infrastructure, neighbourhood, size, structure, condition etc. Yet houses are very different from other goods. Houses differ markedly from each other by type and location, transactions can be complex and buyers and sellers can never make fully informed, risk free decisions. In practice, households cannot buy a little more or a little less housing each day depending on relative prices. Instead people live in homes everyday, but typically make very infrequent and long lasting choices. There is a distinction between houses and housing services. Houses are the stock or buildings which, when combined with other inputs such as lighting and heating, provide a flow of housing services to households everyday. This distinction implies that houses perform two functions. Houses are the source of essential housing services to be consumed by the occupant, and can be considered as an asset, which can be bought and sold. These two properties come together when someone improves their home, for example through an extension. They immediately increase the value of housing services they are consuming. And, when they come to sell the home, they will see a higher price for their asset (ODPM 2005, pg. 15). Many theories and models are established since

1920s. Prior to 1920s there was no disciplinable area of research and analysis, which could be labelled urban economics, land economy or housing economics. (Maclennan, D. 1982, pg.3). The theory of residential location was established in late 1950s. This theory has terms to be called the trade off theory of residential location because it represents each household as choosing its location by trading off housing costs, which tend to fall with distance from the city centre, against transport costs, which tend to increase with distance from the centre (Evans, A.W. 1992). A major shortcoming of the trade-off model is the assumption of a monocentric city. As the relevant activities on which the model is based are usually simplified to workplaces, this assumption implies that all jobs are located in the city centre. (Ball, M. and Kirwan, R. M. 1977). The housing market in the United Kingdom is composed of three distinct yet interrelated tenures: owner occupation, private rented accommodation and social rented housing which includes the total authority stock, housing association dwellings and other non-profit housing organisations. These sub-markets are related through a pattern of flows complicated by contractual obligations, ownership, property rights and government intervention: from privately rented housing to owner occupation or to the social sector; and from the social sector to owner occupation (Balchin, P. and Rhoden, M., 1998, pg. 50). The privatisation of housing by Conservative governments in recent years has taken broadly three forms: first, the selling off of council houses to their tenants; second, and in part to facilitate rehabilitation, the disposal of parts or the entirety of council estates to housing association, trusts and private companies either for renting or resale; and third, the privatisation of the funding of private sector housing rehabilitation. (Balchin, P. and Rhoden, M., 1998, pg. 67) In the late 1990s many parts of the country affected by low demand. There is no single definition of low demand; it can be applied to areas where any of the following symptoms are present. Private sector private property values particularly low and/or falling in relative or absolute terms. high private sector void rate high turnover of population significant incidence of long-term private sector voids or abandoned properties visibly high incidence of properties for sale or let. Social rented sector a small or non existing waiting list tenancy offers frequently refused high rates of voids available for letting high rates of tenancy turnover (Bramley, G., Munro, M. and Pawson, H., 2004, pg. 66) There is no single explanation for the low demand phenomenon. Different combinations of factors are involved in different areas. Generally, these may be grouped into three categories.

1. broader regional and sub-regional effects of demographic trends, particularly migration, which are often seen as linked to economic restructuring and employment changes. 2. changes in preferences and behaviour, generally associated with a declining popularity of certain types of housing and with rising turnover and instability in the resident population 3. micro-social processes at the neighbourhood level which lead to particular areas being stigmatized by reputations for poverty, crime and other problems, leading into processes of cumulative deterioration of conditions which may ultimately culminate in abandonment(Bramley, G., Munro, M. and Pawson, H., 2004, pg. 72). III Impact of Urban Regeneration GEAR Glasgow Eastern Area Renewal Project was started in 1976, it was one of the first and largest urban renewal schemes in Europe. The image of the area is improved by the physical improvements that arise when unattractive vacant land is replaced by attractive residential environments. The houses built for sale in the East end were popular and successful. The older houses rehabilitated for sale were somewhat cheaper and also attracted a long queue of potential purchasers. Typically the purchasers were young, childless couples where both partners were working, many in non manual occupations. Many of them had either moved or returned to the east end and so had an attachment to the area, but equally many purchasers were simply attracted to the price, quality and accessibility of the new developments. (D, David and M, Alan, 1987, pg 150)

Speke and Garston wards are located in the south of Liverpool. These are amongst the first hundred of most deprived wards in England. These areas are considered to be one of the largest and most successful urban regeneration areas in the country (renewal.net). Total population of Speke and Garston in 2003 was 18, 170. It consists of total 8,884 residential properties out of which 1.5 per cent is LCC housing, 47.5 per cent is RSL housing and 51 per cent are privately rented or owned. (Ward Profile Series, 2005). Both the areas predominantly have social rented and owned housing tenure. The most common housing tenure type is owned/buying (39.2 per cent). The second most common tenure is social rented housing (34.5 per cent) (2001 Census Profile Series, 2004). There is a remarkable fall in LCC housing compared to 2004 Census Profile Series. In 2001 LCC housing was 16 per cent where as in November 2005 it was only 1.5 per cent. At the same time percentage in RSL and Privately Rented/ Owned has increased. Speke and Garston contain about 10% of total RSL stock of Liverpool which is second highest amongst all the wards. Tenure Mix of Liverpool Housing Stock 2005 Ward Total LCC Housing Residential Properties Count % Speke Garston 8884 133 1.5% Liverpool 209053 18436 8.8%
Source: 2005 Issue, Ward Profile Series

RSL Housing

Privately Rented/ Owned Count % 4528 51.0% 145667 69.7%

Count 4223 44950

% 47.5% 21.5%

As per Liverpool City Council, Housing Strategy Group (lamp) 2003, total residential properties in Speke are 4,798 out of which 63 of Liverpool City Council (LCC), 2,400 of Registered Social Landlords (RSL) housing and 1,765 are privately rented/ owned. Out of total properties, 279 properties are vacant and 126 are long term vacant. During the period of 1971-1991 overall percentage of private renting housing has decreased in Liverpool but in some wards it has increased. In Speke there were 38 numbers of household in to private renting in year 1981 but in the year of 1991 it has increased up to 45 (Groves, R., Lee, P., Murie, A. and Nevin, B. 2001, pg 10). In the mid 1990s, the area of Speke and Garston, once known as the engine room of Merseyside, had been badly hit by the decline of manufacturing industry and port-related business linked to the nearby Garston docks. Of those out of work in Speke and Garston, 48.7 per cent were long term unemployed. As well as unemployment, residents faced many other problems poor repair and maintenance of their homes, a lack of local facilities and inadequate public transport links. Social statistics in the mid 1990s reflected the years of decline. Less than one in the six families owned a car with half the household officially living in poverty. Poor level of educational achievement had created a cycle of deprivation. A 1996 survey found that 43 per cent of local people regarded themselves as having no skills. An employer-needs survey discovered that 88 per cent of local people were rejected at interview because of poor attitude or lack of motivation. It was against this background that, in 1996, Speke Garston Development Company was formed. (SGDC, 2003). Speke Garston Partnership was set up in 1995 as a result of a successful 17.5 million pounds bid for funds from the Governments Single Regeneration Budget (SRB) Challenge Fund. South Liverpool Housing (SLH) was created in 1999 when the City council transferred the management of

4500 local homes to the new agency. (renewal.net). Since 1996 to 2003 over 5, 600 jobs created, over 330m GBP invested from private and public sector, over 230, 000 m2 of new floorspace built or improved, 240 ha. of land improved, over 250, 000 new trees, shrubs or plants over 22 Km of roads built or improved (SGDC, 2003).
Property sales in Speke and Garston 1999-2005
14 0

12 0

10 0

80

60

40

20

Ye ar

Garston

Speke

In 1999 total number of properties sold in Speke and Garston were 33 and 203 respectively. Since 1999, numbers of transactions in these areas have increased remarkably. Continuously for four years number of sales had been increased. In 2004, total 231 and 447 properties were transacted in Speke and Garston area. This shows sudden increase in demand which may be due to the regeneration process. During the period of 1995-2005, in Speke and Garston, there has been a remarkable development. Various partnerships were introduced for various purposes. The main aim of all these initiatives was to improve or regenerate the area in a holistic manner. Many industries were introduced and the existing once revived to boost the economy of the area. As evident from the price chart it can be said that there has been a rise in property prices since the first quarter of 2003.

Overall Average Price in England and Wales, Liverpool, Speke and Garston 1999-2005
210000 200000 190000 180000 170000 160000 150000 140000 130000 120000 110000 100000 90000 80000 70000 60000 50000 40000 30000 20000 10000 0

Ye a r

Liverpo ol

Garsto n

Speke

England and Wales

IV Conclusions This paper has identified that there is definitely an impact of urban regeneration on housing market in terms of prices and demand. But, it is very difficult to measure the same. An indirect impact of regeneration is that success can create its own problems. Much of the existing employment in many of the city centre UDCs is marginal and benefits from cheap premises. Regeneration and redevelopment can raise property values and rents, with the result that increase in costs can affect the viability of existing industry and employment. This is clearly a critical issue, the effects of which require careful monitoring (Berry, J., McGreal, S. and Deddis, B. 1993, pg. 269).

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GLITERING PAST A BRIGHT NEW FUTURE, Synergy, [online] [Available at: http://www.liverpooldev.co.uk/SGDC_REVIEW.pdf accessed on 20 July, 2005] Ward Profile Series (2005) Ward Profiles For all Liverpool City Wards, The City of Liverpool Regeneration Portfolio, Liverpool.