We don't know for certain that this is so but we'll push it out there for consideration. Perhaps £2 million is a bit much to pay for the one single unit of "affordable" housing in London? Yet that does seem to be the demand being made here, that this price should be paid:
The developers have also ensured that residents won’t have to share walls with anyone on a modest wage as they made a not-uncommon agreement with Westminster city council and the mayor of London that the half-a-billion pound development overlooking Kensington Gardens should not include a single affordable flat despite the “housing crisis” gripping the capital.
The City bankers behind the Park Modern development – which is being built on the site of one London’s few remaining hostels – hope to bring in £450m selling all of the 57 apartments in the block to the super-rich. The cheapest 1,000 sq ft apartment at the back is being marketed for sale at £2m. At the top of the nine-storey block, a double-height five bedroom penthouse is offered for £30m.
This is an outrage apparently. At which point, think through what the demand is. Here we've a property which can be sold (the cheapest can be sold for this price) for £2 million. The demand is that instead of being sold for this price it must be offered for an under the more general market rental - that's what affordable means in this context.
Imagine that - as we don't in the slightest think should happen - that the building of for market housing should be accompanied by the construction of that affordable unit or seven. Why does it have to be in the same building? To insist upon that is to ignore the second most important part of economics, opportunity costs. That unit can go or £2 million. £2 million, even at London prices, will buy 10 units elsewhere in the capital. OK, maybe five. So, for the same expenditure of resources do we want ten, OK five, units of affordable housing or one?
The demand is that we'd prefer one. Which is, of course, simply lunacy. How did we end up with this foolishness as policy?