Of the £250,000 sale price, only a relatively small amount actually goes into building the home itself. In fact, the developer’s aim is to spend as little money as possible on the home — to reduce its size and quality as far as they can. Even if a technological innovation allows the developer to build a home for less, they will still sell the house for the same price (whatever the market will allow), and just take a larger margin. This was illustrated by the absurd story of New Labour’s flagship ‘£60K homes’, which cost £200K+ to buy, no less than any other home.
The third cost is simply that it leaves most people behind. On small sites, or sites outside growing metropolitan areas, or for those on low-incomes, speculative development is simply ‘not viable’ (that’s to say, it’s not sufficiently profitable for investors to bother).
The first cost is a social cost, and we all experience it at some point in our daily lives — in term of our mental and physical health, social isolation, inequality, long commutes, life in tiny, poor quality, unsustainable homes, high heating bills, loneliness, and years spent working in bad jobs to pay off vast mortgages. For the large part, the homes we live in were not designed to improve our lives, they were designed to be property assets which we happened to end up living in.