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January 22, 2011

Spaced out in a flat world

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Tom Friedman's book 'The World is Flat' [2005] is filled with anecdotes about change in different parts of the world that threaten our fatcat lifestyles in the North. “One cannot stress enough: Young Chinese, Indians and Poles are not racing us to the bottom, they are racing us to the top” wrote Friedman at the time; he added that “in China, when you are one in a million, there are 1,300 other people just like you.”

I've been preoccupied, since reading Friedman's book, by what 'flat' and 'equal' might mean in terms of urban living space. When I started collecting data on the average space per person, I came up with these startling numbers for square metres per person [add a zero to turn them into square feet]:

USA 60
Britain 38
Germany 38
France 37
Japan 31
China 25
Russia 5.0
Laos 6.5
Egypt 6.2 [Manshiet Nasser]
Nigeria 1 [Kiberia]

The trend in rich countries, until the crisis, was for bigger homes with fewer occupants: between 1950 and 2000, in the US, living space per person increased by 183%. and home size increased by 120%

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For decades, shrinking household size, growing incomes and local zoning regulations fuelled demand for more and larger homes on larger lots. Land prices increased in large part due to the total overall demand for residential property.

What will the consequences be if that trend is reversed, and space per person starts to converge on a global average?

During the Great Depression, after all, the number of people living in a US home often doubled. By all accounts, that pattern is repeating itself today. The reason more people are not living in tent cities or on the streets is that large numbers of children are moving back in with their parents, or vice versa. Until the crisis, the US had a density of about 2.4 or so people per housing unit. If this were to increase 30 per cent it would mean about 30 million excess housing units.

In the UK, too, there seems to be a remarkable growth of space that people don’t need. George Monbiot discovered the remarkable fact that between 2003 and 2008 (the latest available figures), there was a 45 per cent increase in the number of under-occupied homes.

Meanwhile, by the end of last year, the floor space per household in China averaged 20.4 square meters, just at the level of medium-income countries. If global trends converge demand for more housing will continue to drive growth - but only until average floor space reaches 30 to 35 square meters/per capita.

Yes, I'm playing fast-and-loose with numbers here. Multiple factors are at play in different parts of the world. But if the trend towards a levelling of space per person is even is broadly true, prospects for the mighty Real Estate Industrial Complex look less rosy than they've been for generations.


Posted by John Thackara at January 22, 2011 11:34 AM