Spatial Disparities and Housing Market Deregulation in the Randstad Region a Comparison with the San Francisco Bay Area ★
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SPATIAL DISPARITIES AND HOUSING MARKET DEREGULATION IN THE RANDSTAD REGION A COMPARISON WITH THE SAN FRANCISCO BAY AREA ★ Liou Cao McKinsey & Company, Inc., New York Office, USA Hugo Priemus Delft University of Technology, The Netherlands Summary Since 1989, Dutch housing policy has been changing in property value in urban and suburban areas than to allow more scope for market forces. This article the San Francisco Bay Area, though the gaps in will evaluate the spatial disparities related to these household income are narrower in the Randstad policy changes in the development of the housing than in the Bay Area. The comparison draws atten- market in the Randstad region of the Netherlands. tion to the policy implications of problems that are The evaluation is placed in an international perspec- likely to be caused by suburbanization and property tive by drawing a comparison between the Randstad value segregation in the Randstad and presents a and the San Francisco Bay Area in the United States. number of policy recommendations. Spatial policy, The comparison focuses on three specific aspects: urban renewal policy, and tax and income policy can suburbanization, spatial disparity in the distribution play a significant role in mitigating the spatial impacts of household income, and spatial differentiation in of housing market deregulation on the Randstad. the value of property. The results show that since the more market-oriented housing policy came into KEY WORDS ★ household income ★ housing force, the Randstad has witnessed faster suburban- market deregulation ★ Netherlands ★ property ization and – to a certain extent – a greater disparity values ★ spatial disparity ★ suburbanization ★ USA Introduction which has had a significant impact on the development and spatial transformation of the As the European Union becomes more of an Dutch housing market in the past decade and will economic reality and major global cities engage in continue to do so in the future. economic restructuring, the Netherlands finds itself This research will evaluate the spatial disparities in a turbulent transition on many fronts, not least its between household income and property values housing markets. For a long time the Dutch housing resulting from the new market-oriented housing market has been known for stringent and effective policy in the economic centre of the Netherlands – state regulation, mainly through the housing and the Randstad region. The evaluation is presented by spatial planning policy. This is reflected in some of comparing the Randstad with one of the major its key characteristics: the strong position of the metropolitan areas in the United States – the San social rental sector, broad rent subsidies and rent Francisco Bay Area. At first glance, the Netherlands regulation, and the generous provision of and the US are ‘worlds apart when it comes to developable land by the municipalities (Badcock, housing markets and their policy contexts’ (Priemus, 1994). However, since 1989, the Dutch government 2000). Clark and Dieleman (1996: 3) present the US has pursued a more market-oriented housing policy housing system as market-driven and the Dutch (Boelhouwer and Priemus, 1990; Heerma, 1989), housing system as a regulated housing market, European Urban and Regional Studies 14(4): 362–381 Copyright © 2007 SAGE Publications 10.1177/0969776407076289 Los Angeles, London, New Delhi and Singapore, http://eur.sagepub.com LIOU & PRIEMUS: SPATIAL DISPARITIES AND HOUSING MARKET DEREGULATION 363 largely the result of government interventions. been heading in a more market-oriented direction However, there are converging trends and Dutch and the potential spatial impacts of this movement. urban areas are increasingly facing new challenges Levels of suburbanization, housing market comparable with those in the US. The growth in segregation, and social inequality have always been personal wealth and the subsequent reliance on pretty mild in the Netherlands compared with the private automobiles as the preferred form of American situation. However, since the 1980s, transportation in the Netherlands are generating changes in the role of the welfare state and housing threats of American-style urban sprawl and policies in particular have clearly reflected the mismatches between the job market and the housing prevailing mood of privatization, deregulation and market. The growing racial and ethnic diversity in decentralization as well as the desire to cut budgets the Netherlands is also raising concerns about social (Van Kempen et al., 2000). There have been growing polarization and concomitant housing market concerns and vigorous debates on whether the segregation. Moreover, since the housing policy was housing market is heading towards the more free- deregulated in 1989, the Dutch housing market has market environment, accompanied by references and come closer to a free-market situation as in the US. descriptions of what is happening in American cities: Now that the Dutch government is gradually the erosion of the position of low-income households, withdrawing from providing housing as a task of the the migration of higher-income populations to the welfare state and is allowing more scope for market suburbs, the concentration of ethnic minority groups, forces, and given the processes of economic and increasing housing segregation and disparity in restructuring and globalization which are occurring income (Blauw, 1991; Dieleman and Van Kempen, all over the world, it may prove useful if we examine 1994; Hamnett, 1994; Kruythoff, 2003; Murie and the changes in the Netherlands against a free-market Musterd, 1996; Van Kempen and Van Weesep, 1997; ‘benchmark’, as in the US. This will help us to Van Kempen et al. 2000). Some observers argue that gauge the extent and pace of the transformation the Dutch housing market is edging towards the currently underway and to identify the policy, American model; others state that there are still large institutional, and financial factors behind the differences between Dutch and American housing differences. Only when these factors have been markets (Van Weesep and Priemus, 1999). singled out can policymakers in the Netherlands As Dutch housing policy shows some convergence take steps to retain a healthy and egalitarian housing with that of the US and as some common socio- market and avoid or at least mitigate potential economic issues are emerging despite the institutional problems. and historical differences, we will conduct an This article compares the patterns of housing empirical comparison to assess the changes in the market development in the two regions and Dutch housing market in a bid to determine how far addresses the following research questions. Is a more the patterns of change resemble or differ from those in market-oriented housing policy leading to faster the US. Within this context, we formulate our general suburbanization, greater spatial disparity in expectation as follows. Since the implementation of a household incomes and more spatial differentiation more market-oriented housing policy in 1989, the in property values? If so, has the housing market in development of the Randstad housing market has the Randstad, since about 1990, been moving shown increasing similarities to the development of towards similar spatial disparities to those found in the San Francisco Bay Area, despite the very different the San Francisco Bay Area? housing systems in the two regions. The long history and special nature of the Dutch Given the limited scope of this article and the housing market within the context of the welfare data availability, we shall focus on how, since 1989, state make the shift to a more market-oriented the dynamics of the Randstad housing market have housing policy ‘an unprecedented activity to say the followed the development of the Bay Area in three least’ (Boelhouwer, 2002). In transition from the hypothetical respects: ‘top-down’ or federal approaches to the ‘bottom-up’, more flexible, decentralized solutions to housing, it • faster suburbanization; is important to determine how fast the Dutch • greater spatial disparity in household income housing situation, particularly in the Randstad, has within the Randstad; European Urban and Regional Studies 2007 14(4) 364 EUROPEAN URBAN AND REGIONAL STUDIES 14(4) • more spatial differentiation in property values Francisco, San Mateo, Santa Clara, Solano, and within the Randstad. Sonoma) is home to about 6.78m people and 3.37m jobs (in 2000). With 101 cities and nearly 1,000 The theory behind these hypotheses is that special districts, the Bay Area also has a polycentric deregulation will automatically free up the housing urban spatial structure (Figure 1). The four largest market, which is currently characterized by rapid cities are San José, San Francisco, Oakland, and suburbanization (following dominant preferences for Fremont. The Bay Area is renowned for its robust one-family homes in a green environment), and will economy and exuberant growth, although that subsequently lead to a greater disparity in household growth was affected by the economic slowdown and incomes and property values between urban downturn in high-tech industries in the US. It has environments (low incomes and low property values) long served as an incubator for the high-tech and suburban environments (high incomes and high industry and a centre for biotechnology research property values). and product development. The article is structured as follows. First, we The two urban regions