This document discusses several challenges related to land markets, land use, and planning in fostering sustainable cities. It notes that land markets are often neglected in academic literature on sustainable cities. It also discusses the complex interactions between land use policies, planning policies, and other policies. Additionally, it mentions some of the difficulties cities face in planning for population decline, including falling land values, excess infrastructure, and challenges in managing land assembly.

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Land Markets, Land Use and
Planning in Fostering Sustainable
Cities
Philip McCann
University of Groningen

2. Land Markets, Land Use and Planning
in Fostering Sustainable Cities
• Sustainable and inclusive cities agenda → land markets
are largely neglected in academic literature
• Urban economics, regional science, environmental
economics, economic geography
• Classical thinking about land markets → 1960s
• Interactions between land use policies, planning policies,
and other policies are complex
• Institutional, cultural and language differences in ways of
thinking about land between developers, financiers,
architects, planners, engineers, economists, households,
investors, or policy makers
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3. Land Markets, Land Use and Planning
in Fostering Sustainable Cities
• Land markets are always political economy problems
• Policy mistakes in sectoral decision-making often impact
on land markets
• Ability to think spatially depends in part on the
governance and institutional structures
• Nature and effectiveness of land use and planning tools
→ legal issues
• Language and legal difficulties in learning international
lessons
• Land markets and land use policies → multiple goals
and multiple stakeholders
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4. Land Markets, Land Use and Planning
in Fostering Sustainable Cities
• Land use deregulation to increase supply and reduce
house price growth is difficult
• Incentives need to be aligned between households,
commercial interests and public policies for any thematic
priority
• Land markets underlying housing markets → limited
power of governments facing a ‘wicked problem’
• Need to ensure development permission leads to
development
• Need to avoid land banking → hedging and monopoly
positions
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5. Land Markets, Land Use and Planning
in Fostering Sustainable Cities
• Moves towards urban densification (compact cities) are
desirable for health-related, energy and transport
planning and also increasingly for age-related planning
• Individual preferences may move in different or even
opposite directions
→ differences by income, education, age, life-course
• Population ageing and population decline
• More than one third of Europe’s cities were declining in
population prior to the crisis and this has been
exacerbated by the crisis
• Differential urban population growth due to migration
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6. Land Markets, Land Use and Planning
in Fostering Sustainable Cities
• Urban planning becomes very difficult in population
decline context
• Asymmetries between population growth and decline
• Urban boundaries with small population increases make
city planning straightforward
• City and regional growth models assume contant (ish)
positive growth in population, GDP, real or nominal
prices
- Constant real or nominal prices with population growth
- Nominal price growth with constant population
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7. Land Markets, Land Use and Planning
in Fostering Sustainable Cities
• Population decline cities
• Land values falling in real and/or nominal terms
• Over supply of under-utilised infrastructure
• Bankruptcies, failures and vacancies happen
sporadically – scattergun holes in land markets
• Maintenance and depreciation costs
• Danger of assets being shorted, but also hold-out
positions
• Land assembly and contiguity challenges associated
with managing decline → more compact city
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8. Land Markets, Land Use and Planning
in Fostering Sustainable Cities
• Real estate shock effects are dominated by cities →
induced effects in the real economy
• Relatively higher transaction costs lead to relatively
(absolutely) higher transition costs
• Possibilities for urban policy financial investment vehicles
mixing financial and non-financial returns?
• Devolved governance is highly problematic in some
cases → vulnerable fiscal positions
• Questions regarding the long term financial basis of
public investments in urban development → governance
decentralisation and devolution is not just about
accountability and mobilisation but also viability
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