The RICS Commission produced a housing market/policy reform report yesterday (More Good Homes and a Better United Kingdom[i]).This contained a long list of recommendations premised around a sense of fundamental market failure, a severe evidence deficit at the heart of housing policy, policy fragmentation and a consequent call for a range of actions to boost housing supply, mitigate existing policies such as welfare reform and expand private finance for rented housing. The policy proposals are a combination of some good novel ideas, seeking direction change (e.g. seeking greater standardisation and less local variation in planning) but also proposals that are on the face of it less attractive (e.g. qualified support for Help to Buy).
The diagnosis by the Commission got me thinking. Is the seeking of a comprehensive reform approach doomed to failure because we have mis-specified the problem? If social, policy, economic and cultural processes over time have evolved our housing system into something complex and indeterminate, perhaps it is now, in the classical sense, a wicked problem that will defy solution[ii]?
Horst Rittel, working in a context of systems design, distinguishes between tame and wicked problems. Tame problems, as discussed by Conglin (2005)[iii] are often found in an engineering or science context and are determinate, well-defined, we know when they are resolved, we can evaluate them objectively and we may face the same sort of problem repeatedly. Wicked problems are much more difficult to pin down. Rittel describes them as ‘ill-formulated’, where decision-makers (stakeholders) typically hold ‘conflicting values’. Indeterminacy is the characteristic of such problems. He went on to describe 10 features of such problems and these were helpfully reformulated by the Australian Public Service Commission (APSC) into seven public policy dimensions (as might apply to problems of climate change or poverty or, in Glasgow’s case, stubbornly and unexplained high mortality rates). The APSC stressed:
- Wicked problems are difficult to define because of multiple perspectives and interests on the problem
- Multi-causal interdependencies associated with the problem
- The problem is often unstable
- There is usually no clear solution (because there can be a long succession of further causes and solutions as you work back into complex root causes of e.g. poverty)
- The problems are socially complex
- The problems rarely fit with one organisation’s competency or responsibility
- Addressing the problem may include the requirement to change the behaviour of those affected.
How does this speak to the housing market?
I think that the modern British housing system is characterised by different conflicting interests – outsiders and insiders. These multiple perspectives are increasingly irreconcilable and, added to that, successive Governments have been unwilling electorally to challenge the key group of established existing home owners. This is at the expense of potential first time buyers and this intergenerational conflict is now an established cause of the volatility we see in the market. Positions are locked-in and it is difficult to make policy progress regarding a goal such as stable house prices (i.e. zero long term real price change) and the instruments (i.e. tax powers) that might be required to effect such a policy.
The housing market is also wicked in the sense that the problems defy simple causal explanation and that further reasons beget different solutions which in turn beget more explanations. We understand the supply inelasticity problem in its own right but it connects to other housing tenures as people are obliged to rent, this promotes landlordism and meanwhile supply requires confidence, demand and finance before it will advance; yet, too much demand side stimulus may simply inflate a house price bubble stoking volatility (instability) and a further cyclical episode. Other ‘deeper’ stories than market general equilibrium analyses can also explain the same and indeed other aspects of the housing market.
It is evident that housing interventions do not sit easily or chiefly with one organisation. Not only does the Treasury and the Bank of England matter, so does social security. Moreover, from the perspective of Edinburgh or Belfast – housing is in part devolved but in part is also a function of UK Government decisions (and this evolves e.g. stamp duty is being devolved to Scotland and council tax benefit is for the time being remaining protected in Scotland). Meanwhile, actual housing markets are about functional geography and the interaction of different tenures with each other and local economies. Complexity is a fair summary.
So, housing does share some of the features of wicked problems, relating to its multi level complexity as a social and economic system, because of the multiple conflicting interests that inhabit it and because of its instability. All of these things increase the likelihood that discrete policies e.g. in the benefit system, or though guaranteeing loans, etc may induce unforeseen and unintended consequences. Add to that, the existence of medium term market failures in credit markets, the wider economy’s stagnation, austerity Britain and technical extreme supply inelasticity. It’s not good, is it?
Is this all a counsel of despair? Yes and no. It is a warning to think hard and carefully about new interventions and the need to link them closely and clearly to a consistent set of policy goals (like price stability or new supply linked sensibly to unmet need). But at the same time it is a recognition that we need humility, sensible ambitions and a long term agenda if we are to bend the trend of the housing market’s wicked evolution. In particular, we need to get smarter about influencing the big social policy and electoral debates in order to convince more of the opinion formers and those who input to party/manifesto thinking about gradually and sensibly altering expectations about housing as an asset and de-toxifying housing by seeking to make it a normal commodity and consumption activity rather than continuing on this destructive path.
[ii] Rittel, H and Webber, M (1973) Dilemmas in a General Theory of Planning’, Policy Sciences Vol. 4 (155-69). Australian Public Policy Commission (2007) Tackling Wicked Problems: A Public Policy Perspective. Australian Government: ACT.