The economic, social, political and environmental impact of land use regulations in FRANCE

By Vincent BENARD Institut Hayek

www.fahayek.org vincent@benard.com

Housing, public crisis, private care

(Nov. 2007)

French Median multiple (Gross revenue)(Figures are a bit higher using net disposable income)

Index of home prices relative to households’ net disposable income – Index 1 : 1965 // 2008 peak: 1,66 to 1,9 -

# of new homes / year

Supply reacted with a 6 year lag to demand

Demand begins to soar

Construction costs didn’t increase as fast as home prices…

Real estate prices, 1998-2007 gross inflation

Construction costs : +30 % Home prices : +140% Serviced developable land : +500% (w/ high regional

variability) Coastal zones : X 10 and more

Cost of land servicing : 15-20€ per square meter of land Cost of serviced land in a typical rural town, 20km from Nantes'

Fringe: 1997 : 15-20€ (so most rural developments had to be

subsidized) 2007 : 120-180€

30 km from Montpellier : 1997 : 30€ - 2007 : up to 300€

When small lots are nearly as expensive as bigger ones… The regulatory penalty is high

Small lot

Bigger lot

price*

Regulatory penalty

*Costs of land servicing deduced

surface

Not only in Paris

In red, fastest growing areas Rennes (521 000) Nantes (804 000) La Rochelle (140 000) Toulouse (1 100 000) Montpellier (530 000) Vannes (130 000) Poitiers (204 000) (...)

Consequences of tough land use regulations Housing unaffordability Wealth transfer from middle class to richer people « urban sprawl » containment leads to « rural sprawl » and

« rural mess » Ugly urban landscapes out of historical areas Environmental benefits : not so evident Corruption of political life expensive and powerful bureaucracy

1999 to 2006 : rural small cities grew much fasterThe example of Nantes

Land use corruption, a « serious concern »

For the first time, in 2006, official documents point out « land regulation corruption» as a major concern

The phenomenon is impossible to quantify precisely.

Some lawyers depict it as « endemic » in some regions

Other Environmental effects

Ugly urban landscape, because of big social housing programs

<== This one is not the ugliest...

Natural zones damaged Arsons... When nicely wooded

lands are in the process of being classified as « forever undevelopable », these lands are exposed to wildfires... Just a coincidence, of course !

New smart growth utopias ?

Two examples of « ideal

cities » as smart growth

and environmentalists

see them...

Would you call these...

« sustainable » ?

CONCLUSION

Knowing all we now know about the effects of zoning regulations, we should take the opportunity of currently falling prices to scrap down all these regulations ....

We should enact land regulations that let owners decide what to do with their land

Because of falling prices, it's politically easier to do it now

But, alas, it's very unlikely to happen

Thank you !

For french savvy people : Institut Hayek : www.fahayek.org My blog, « objectif liberté » : www.objectifliberte.fr

My e-mail : vincent@benard.com

Images from : CGPC, INSEE, CODELA, COURLY, Etudes Foncières.