LONDON AND PROPERTY MARKETS - A LONG-TERM VIEW

This paper examines the relationship between investment in built struc tures, economic growth and economic cycles in the UK from the middle o f the 19th century and relates its findings to the development of Lond on. A rising price of built structures relative to investment in equip ment has existed throughout virtually all of the time-period. This, it is argued, has encouraged suburbanisation. In addition, a long-term r ise in demand for housing is putting additional pressure on living spa ce in the city. London has benefited however from the high level of bu ilding investment in modern economies, particularly in attracting key building-intensive activities, like financial services. Long-phases of building activity are shown in the data and they are argued to have a destabilising effect on London's economic growth. These relationships between the relative price of investment goods, long phases of higher and lower activity in their provision and the London economy, reinfor ce the need for a London-wide planning authority; and, if the social r eturns of building investment are greater than the private returns, as they probably are, for public infrastructure expenditure and for subs idies for new building investment in the city.