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London’s Great Exodus

133 points by kpozin 13y ago

deleted 13y ago
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killermonkeys 13y ago
I'm about to give up on London and move to San Francisco. Both cities are experiencing 10%+ house price inflation and all the pain that goes with it. New York has experienced much the same since the 2008 housing crash. Cities are in, suburbs are out. So I have trouble buying the hypothesis that London's increase is due to its use as a quasi-currency or foreign demand. The demand to live in London and other world cities is common and organic. I don't doubt the UK's retrogressive tax policies encourage more investment than normal but that's not the centre of the demand, nor are Eric Schmidt or Michael Bloomberg legitimately competing with me for housing.
- timthorn 13y ago
  I work in London but couldn't imagine living there - not because of the cost but because it feels so claustrophobic. I live in the Suffolk countryside, and am grateful every evening when on the train that I can escape. Cambridge is close enough to provide most of the amenities of London but on a human scale.
  - porker 13y ago
    I'm glad you can afford it. We'd like to move to Cambridge but the house prices are even more than where we are in the South of England. We're having to think of somewhere further north or less sexy...
    - gjm11 13y ago
      I'm pretty sure timthorn means he's living (not in Cambridge, but) somewhere in Suffolk, and can go to Cambridge for shopping, cultural events, etc., in the same sort of way as someone nearer London might go to London. Cambridge itself has really expensive housing, not as bad as London but still very bad; think San Francisco as opposed to New York. But there are plenty of places within reasonable reach of Cambridge that are much more affordable. I live in a nice village about 7 miles from the centre of Cambridge, and prices there are 2-3 times cheaper than in the centre; move further out to somewhere that's not so much "one of the villages around Cambridge" and prices go down by another 1.5-2x.
      - timthorn 13y ago
        That's exactly it. I'm in not-so-much-one-of-the-villages-around-Cambridge.
        deleted 13y ago
        [deleted]
- codex 13y ago
  Cities have been "in" since the industrial revolution. What's different this time?
  - busterarm 13y ago
    Actually it totally cycles. Availability of cars as well as a government policy encouraging home ownership (cheap loans) created a shift of people moving out to suburbs. If you're really familiar with the biggest cities, you can see this shift over time and it happens with subways and commuter rail lines too. Certain areas of New York's outer-boroughs have seen large shifts in class/demographic over the past 200 years. Coney Island used to be a resort/hotel town for the mega rich. With cars and the completion of major highways, the rich moved out to Westchester and Long Island. The subway eventually reached Coney Island and it became a poor neighborhood. It is now starting the swing back the other way because of new construction and the convenience of the Q line. The biggest shift happened right around when the subway lines were first connected at Times Square and the companies merged.
  - bodyfour 13y ago
    Look back 30-40 years: * Places like the Lower East Side of Manhattan were magnets for broke artists because they were dirt cheap places to live. * San Francisco neighborhoods like SOMA were similarly inexpensive. A few people with meager incomes could go in together and rent a warehouse to live in. * London had numerous squats: housing stock so unvalued that it wasn't worth stopping people just moving in for free. Think about property values in those places today. In the past 60 years we've witnessed a remarkable cycle. First you had the "white flight" to the suburbs starting in the late 1950s or so. By 1980 the general consensus seemed to be that central cities were doomed forever to poverty. Now the trend is reversed and people want to pour back in. However, the regional population is much larger than when this cycle started so central housing has become a scarce resource. The article is mostly about forces particular to the London market though. It is amazing how high property values have gone there. I live in San Francisco so I think I'm fairly accustomed to high prices, but visiting London and seeing mews houses going for £3m still blew my mind. Another peculiarity of the UK market is that a lot of property trading are just leaseholds, so you don't even really own the house after you "buy" it. (There are "freeholds" for sale as well, but that's even more expensive) Lovely city, but it does make you poor.
- objclxt 13y ago
  >I'm about to give up on London and move to San Francisco It seems to me, having lived in both, that they have very similar problems. Both London and SF have a significant wealth gap. Property is even worse in SF: prices are generally speaking more expensive (mainly due to far less supply than London), and average rent is higher. What I'm getting at is if you agree with the op-ed and want to give up on London why would you choose a city which has a very similar set of problems?
  - bencoder 13y ago
    I can't speak for the OP, but check the salary differences between the two cities. The higher prices in SF may be offset.
thrill 13y ago
No one lives in London (San Francisco, New York, Hong Kong, etc.) anymore - it's too crowded there.
- rquantz 13y ago
  Because more and more people live in London (San Francisco, New York, Hong Kong, etc.) now - it's too crowded there. Ftfy. How can they be crowded if no one lives there anymore? Or are you suggesting they're crowded with things other than people?
  - joseph_cooney 13y ago
    It's called a joke. There is probably a few TED talks that you can listen to to explain it.
    - deleted 13y ago
      [deleted]
    - levosmetalo 13y ago
      If you need to explain a joke it's a pretty bad joke. Besides, it was maybe interesting to some people when used first million times, but now, I wish I could downvote ...
      - lotsofcows 13y ago
        That's one possibility... You just prompted me to upvote.
  - matznerd 13y ago
    ftfy... On why he no longer went to Ruggeri's, a St. Louis restaurant: "Nobody goes there anymore. It's too crowded."[2] http://en.wikipedia.org/wiki/Yogi_Berra#Examples http://en.wikipedia.org/wiki/Yogi_Berra#Examples
  - oscargrouch 13y ago
    This reminds me: Who's on First [1] [1] http://en.wikipedia.org/wiki/Who's_on_First%3F http://en.wikipedia.org/wiki/Who's_on_First%3F
codex 13y ago
This kind of housing boom is a direct result of the concentration of wealth in the top 1%. As wealth concentrates, the things that rich people buy inflate in price.
- cschmidt 13y ago
  I believe the overwhelming majority of the buyers at the top end of the London market are foreign. So it does have something to do with wealth distribution, but not the distribution in Britain.
- chuable 13y ago
  So you don't think it has anything to do with easy access to credit and loans?
  - TruthElixirX 13y ago
    Or building codes restricting things to an arbitrary height, or the fact that the aristocracy still owns the majority of the land in the U.K[0]. [0]http://www.independent.co.uk/voices/commentators/johann-hari/britains-land-is-still-owned-by-an-aristocratic-elite--but-it-doesnt-have-to-be-this-way-483131.html http://www.independent.co.uk/voices/commentators/johann-hari...
    - jkldotio 13y ago
      It's probably best not to cite Johann Hari* given there are probably other sources able to establish the same point. *https://en.wikipedia.org/wiki/Johann_Hari#Journalistic_controversy https://en.wikipedia.org/wiki/Johann_Hari#Journalistic_contr...
  - busterarm 13y ago
    These people had easier access to loans anyway because of their ability to pay. All the subsidy does is make it a no-brainer when it comes to where to invest their money. People put their money into whatever gives them the best ROI and for the last decade or so that's been real estate. All it does though is drive prices up and the middle class out.
walshemj 13y ago
The elephant in the room is moving out of London for the schools - less "ethnic" kids
- chuable 13y ago
  It appears that sort of thinking puts one in the minority: http://www.theguardian.com/commentisfree/2013/apr/22/multiculturalism-won-uk-move-on http://www.theguardian.com/commentisfree/2013/apr/22/multicu...
  - omonra 13y ago
    And yet everybody who can afford it, sends their kids to private schools in London. Heck - I know people who sold their house so that they could pay for private schools.
    - to3m 13y ago
      The intent usually seems to be to get one's chidren surrounded by primarily middle-or-better class children, not to keep their schooling racially and culturally pure.
      - yetanotherphd 13y ago
        I don't think the original post indicated a desire to keep one's children "racially and culturally pure" but rather to avoid sending one's children to schools with large number of non-Whites, for any number of reasons.
    - crdoconnor 13y ago
      The rich "ethnic" foreigners also send their kids to these schools, so it's not exactly an escape from non-white children.
      - omonra 13y ago
        It's not a race thing but rather class. People want their children to go to school with отчер kids who are smart / motivated to succeed - hence will focus on school. Best determinant of that are the parents themselves. So private schools end up being essentially a sieve that checks parents. In the US parents move to the suburbs with high local taxes that fund good schools for the same purpose.
knassy 13y ago
Olicarchification, the new gentrification, is a bitch. What do all of these "successful 'creatives' (architects, cinematographers, commercial and television directors, etc.)" think happened to the people that were living there before them?
- yetanotherphd 13y ago
  I think most people would be able to deduce that those people who were living there before moved somewhere else. If you can't use money to buy things that lots of people all want, why bother to earn the money in the first place?
- deleted 13y ago
  [deleted]
- seiji 13y ago
  Report: Nation's Gentrified Neighborhoods Threatened By Aristocratization: http://www.theonion.com/articles/report-nations-gentrified-neighborhoods-threatened,2419/ http://www.theonion.com/articles/report-nations-gentrified-n... (2008) "When you have a bejeweled, buckle-shoed duke willing to pay 11 or 12 times the asking price for a block of renovated brownstones—and usually up front with satchels of solid gold guineas..."
- sliverstorm 13y ago
  What do you mean the new gentrification? Creatives have always been a step in the march of gentrification, roughly approximated as "poor => creatives => wealthy"
  - knassy 13y ago
    That's exactly my point. The 'successful creatives' referred to don't sound like struggling artists and bohemians. It's interesting that the author doesn't acknowledge where they sit in this process.
drpgq 13y ago
The novel Capital by John Lanchester is a great look at a London street that was historically lower middle class but over time has become upper class.
aaron695 13y ago
Lol, it's always funny to see people think the world will collapse when they leave, because they are the 'real' essence. And the fact they seem to think they had some sort of right to be there in the first place having themselves booted out the previous generation.
casca 13y ago
3 families are leaving London and that makes a trend? Comparing property prices in London to Williamsburg or SF and it looks like a similar trajectory to me. Cities are expensive because space is constrained (artificially in many cases) and lots of people want to live there. The author makes note of the low "property taxes" in London which is just spurious. In the US, property taxes are often used as a way to pay for many local and state government services for a number of historical reasons. This is often the only income that some states collect. In the UK, council tax is to pay for a much smaller set of services. A £5m house does not generate 10x the garbage of a £500k house. It's a cheap shot that tries to make a false point for US readers. It's true that the current state of the global economy has meant that fearful foreigners have brought their money and bought property, but this tends to be at the very high end of the market which shouldn't be affecting the middle class that he's referring to. Greater demand by many people wanting to live in one of the world's great cities might.
- crdoconnor 13y ago
  >Cities are expensive because space is constrained (artificially in many cases) and lots of people want to live there. That has ALWAYS been true, so cannot possibly account for today's prices. The last decade's price increases have been driven by the lack of other perceived safe haven investments. Treasuries/Gilts pay below inflation now. That money found a new home: property in tier one global cities. >The author makes note of the low "property taxes" in London which is just spurious. Oh come on. Would high taxes on a house make it a more or less attractive investment? >A £5m house does not generate 10x the garbage of a £500k house. THIS is spurious. Irrespective of whether that's true or not (it's not: a £5m house probably takes up more valuable land, which is made valuable by everything surrounding it - transportation, shops, parks, etc.), it still doesn't change the fact that low taxes make property a much more attractive investment. >It's true that the current state of the global economy has meant that fearful foreigners have brought their money and bought property It's foreigners who have checked out every other safe investment and seen how pathetically they pay. Seen the interest rate on Gilts? Some are also (rightly) fearful of their home governments (Russians, Chinese, Arabs), and want to park their money in a country where the government is unlikely to decide to confiscate it one day. >this tends to be at the very high end of the market which shouldn't be affecting the middle class that he's referring to. Except: A) It does affect the middle classes too. Prices filter down. Everybody who was buying at the high end of the market and gets priced out buys something lower down, which prices them out and so on. Land used on expensive properties is not available for the middle classes. B) It's not just the very high end of the market. London property is being shopped all around the world, from Singapore to Hong Kong to the US as a safe investment for upper middle classes. I could show you a hundred glossy foreign magazines advertising property which is "close" to some tube station on the Piccadilly or Northern line 13-15 stops from the center.
foobarian 13y ago
The property taxes cited are fascinating. $3k per year on a 20 million dollar home??? As they say, there's your problem right there. I've come to appreciate the extent to which property taxes drive a country's culture or system of living. I grew up in an eastern European country where property taxes don't exist, and so there are tons of people who live in quite posh inherited/grandfathered-from-communist-times residences while receiving tiny incomes in comparison. Meanwhile the property tax rates common in the U.S. tend to drive out people who stop being able to afford to live in a locale.
- to3m 13y ago
  The UK does not have property taxes. The figure given is presumably council tax, which is a fixed fee per household, vaguely based on the house's supposed value. The highest council tax band is quite low; i pay £2,000 per year, and my flat is worth a lot less than $20m.
  - bencoder 13y ago
    Also council tax is paid only by the resident, not by the owner, so it's not felt by foreign owners if they are renting it out, or even if it's empty.
    - frobozz 13y ago
      This is correct about rented properties, but not about empty ones. Empty properties can attract a discounted rate of council tax, but are only exempt under certain circumstances (resident in prison/hospital, house unlivable). Long-term empty properties can even attract a higher rate of council tax.
    - chuable 13y ago
      That last part is simply incorrect; Councils have a time limit on whether empty properties are exempt from council tax. Also, there's an extra 50% penalty if it's been empty/unfurnished for 2 years or more: https://www.gov.uk/council-tax/second-homes-and-empty-properties https://www.gov.uk/council-tax/second-homes-and-empty-proper...
Theodores 13y ago
The problems of the London (and UK) property market go back to the days of Margaret Thatcher. Selling council homes, abolishing rates and low interest rates and deposit requirements have stacked the cards in favour of the few. Effectively we are borrowing from the grandchildren with the property bubble. The property bubble received a boost with the dot com crash as it was the only outlet for speculative capital. There have been some dips, however, house price inflation is never seen for what it is - inflation. In fact it is kept out of the headline inflation figure. You can have housing go up 10% a year and inflation be at 2% - notionally. When 25-33% of people's income is spent on housing you would expect that if that cost goes up 10% then the overall inflation would go up by at least 2.5% even if everything else, e.g. food and fuel was static. In the UK we need to look at what our European neighbours do and borrow a few ideas from here and there. For instance in Switzerland foreign nationals need to live there for five years to buy a house and even then they have to actually live in it rather than rent it out. They also have a sizeable tax on owning a property equivalent to its rental value. Consequently the house price inflation in Switzerland is practically non existent and most Swiss people rent. They live like kings compared to most Londoners and don't have a bee in their bonnet about having to be 'on the housing ladder'. In a world where not everyone has a roof over their head, homes should be homes rather than speculative investments for the work shy. Something has gone wrong with capitalism if it makes more sense to invest in property than to invest in the bank (low risk) or the stock market (some risk).
- VLM 13y ago
  "Something has gone wrong with capitalism if it makes more sense to invest in property than to invest in the bank (low risk) or the stock market (some risk)." This macroeconomic observation is probably the most important observation in the whole discussion. When the best thing a people can do with $1M is very expensively (high transactional costs) trade non-productive real estate with each other, that implies an economic collapse in the future, or at least an anticipated one. In a part of the world with (rightly?) more optimism, $1M would be dropped on something productive. Small business. Going in as part of a medium business. Stock in large businesses. Bonds in huge businesses. Productive assets of some sort not a depreciating liability like property. Now what happens to prices when that collapse occurs, and what is the demographic characteristics of the bagholders being set up to be holding the asset when it's price collapses?
baumgartn3r 13y ago
1) odd to find this on Hacker news 2) reads like a remix of David Byrne's recent article in the Guardian about NY [1]. Unfortunately, they both have a point. [1] http://www.theguardian.com/commentisfree/2013/oct/07/new-york-1percent-stifles-creative-talent http://www.theguardian.com/commentisfree/2013/oct/07/new-yor...
ballard 13y ago
I've lived in Shepherd's Bush and to the south by train. The commute from the 'burbs is grueling, but the cost differential is hard to ignore. (Hotels in London are naked extortion.) The palpable sentiment is the average person is walking a razor-thin financial tightrope.
ChuckMcM 13y ago
Interesting, I strongly suggest that the City change its taxing strategy. Seriously. If you get proper property taxes and you don't need the services because the people don't actually live there, then that just accrues to the benefit of the less well off. It also mitigates the challenge of finding housing since the taxes will balance out with quality of life improvements. Its also an exceptionally straight forward way to "tax the rich" as it were.
- peteretep 13y ago
  The City with a capital C is something different in London, a distinction that's made in the article itself.
- Jamiecon 13y ago
  It's a straightforward way to tax people who have homes that are worth a lot of money. Not entirely the same as being rich. What if you live in one of the leafier parts of the east end, where only 30 years ago you could buy a house on a blue-collar wage. Now your house is worth more than £1m. But you're retired and on a basic state pension. You don't want to move to a cheaper area because your friends and family live close to you and are able to support you. High property taxes based on the value of your assets would force you to move away or re-mortgage. Not ideal when it comes to maintaining a sense of community or caring for the elderly. I assume by 'proper' property taxes you mean 'the way the US does things'. I'm not sure that it would work in the UK with our different economics, system of government and geography.
  - eli_gottlieb 13y ago
    >What if you live in one of the leafier parts of the east end, where only 30 years ago you could buy a house on a blue-collar wage. Now your house is worth more than £1m. But you're retired and on a basic state pension. You don't want to move to a cheaper area because your friends and family live close to you and are able to support you. Then you are making very inefficient use of an extremely scarce resource. Economically speaking, you should get out of the way and let someone more productive have that property. Morally that might be wrong, but I think you should be able to argue for why we should adopt policies that sound morally right but have nasty economic consequences. >I assume by 'proper' property taxes you mean 'the way the US does things'. I'm not sure that it would work in the UK with our different economics, system of government and geography. Why not a simple land-value tax?
richliss 13y ago
To live in Central London without really worrying you have to be in one of two camps; the rich or the poor. The rich of course will continue to use their capital to skim the profit and secure their status, and the poor will continue to vote in councils that provide social housing and benefits. I'm one of those who is in the middle and work; I rent in an up-and-coming area (i.e. people look down on it until they come here) and rent is going up 8 times salary. We are already at rent being 30% of combined salary. I won't be in a position to get social housing, so I'll be forced to move in a few months either further out (so travelling will take longer and be more stressful, and the working day longer) or move somewhere less appealing. Property in London is controlled by the super rich who realise its easier to have their current investments increase in value by lack of supply than it is to fund property development. The shortfall in housing in London will be one million homes by 2022! The free market is supposed to mean that supply will rise up to meet demand where possible. The little property development that does go on is usually done by block selling hundreds of apartments in new builds off plan to investors from Asia/Nigeria etc. who in turn get them rented out, or insane apartments that are sold to Russians and Arabs for £100m+ pulling all other property prices up. I think that early stage tech entrepreneurship in London will be a rare thing unless you can live in your parents house and live like a student in the near future, or you will end up giving away so much capital just to survive. The more I read about Berlin the more I see it as being the future of tech in Europe; creative, cheap property and offices (in comparison), intelligent people and cosmopolitan.
- wowfat 13y ago
  " I rent in an up-and-coming area (i.e. people look down on it until they come here)" - what area are you renting in?
  - richliss 13y ago
    Stockwell
- frobozz 13y ago
  The poor camp is even smaller. It's not just those who are poor enough to be eligible for social housing, but those who are lucky enough to get it, or unlucky enough to really, really need it.
jasonkester 13y ago
Funny, we saw this exact same article come through a few months back about Paris. It's the same story: All the trendy rich people that displaced the poor bohemians and gentrified the neighborhoods are now being displaced by even richer people. It makes for good ironic commentary, so it plays well here. I suspect we'll see the third part of the trilogy about New York come through by the end of the year.
- epsylon 13y ago
  I currently live in Paris and that's exactly what I was thinking while reading the article. Except maybe for the taxes which may be a little higher in France, the situation seems nearly identical. In the last decade, prices in the whole capital have doubled.
- barrkel 13y ago
  The article risks conflating two separate trends. People with children don't really want their children to grow up on the streets of London. As the article writer gets older, he'll know more and more people with children moving out, independent of house prices. The other bit, the silly prices paid for unoccupied houses, is mostly concentrated in central London, and a few bits in close proximity to the west, north and south. There are still plenty of less desirable neighbourhoods.
  - mathattack 13y ago
    One could substitute Manhattan too. This seems to be true of many high culture cities, perhaps as a result of the global investment environment.
- pantalaimon 13y ago
  The same is happening in Berlin, still at an early stage compared to Paris or London, but the trend is clear.
guard-of-terra 13y ago
Moscow realty is Russia's reserve currency for ten years now, what's so surprising with London? "They accept that their children will never be able to afford to stay on in the city." The reality of new middle ages when who you are is defined by what you inherited, not by your skills.
- eli_gottlieb 13y ago
  So you're just going to let the Western world move into a "new Middle Ages", then?
kingrolo 13y ago
A great thing about moving to the suburbs (from Zone 2 to Zone 5) which I didn't consider before, was that now in the morning I always get a seat on the train, so I can immediately get my laptop out, and the journey disappears. Definitely worth the extra 7 minutes train journey for me.
gotofritz 13y ago
A lot of people move out of London when they have children. Inner city schoolkids are scary, many don't want their children growing up being mixed up with gangs. I know I didn't.
duiker101 13y ago
Matt moved from London to Cambridge? Not that the prices here are so much better.
robmcm 13y ago
One soultion would be to have a tax on empty properties, and tax rental income in bands simular to tax duty. This would then make property a worse investment, and increase the supply for people buying. Obviously you would want this to come in slowly so it doesn't cause a crash. I guess government isn't around long enough to do this, and no one wants a crash on their watch, so are happy to let it continue.
tehwalrus 13y ago
the tax figures quoted are nonsense. They are for council tax - paying to have your bins collected, and in London only the subsidy for the tube and busses - not all the taxes you have to pay for living in the UK. If you rent the property, your rent income would be subject to income tax which is a % of the income (depends on the total income, but for large enough values will be 40%.) Additionally, when you buy or sell a house, you must pay "stamp duty", which is a percentage of the sale value, and for a £30m house would be 7%, or £2.1m [1]. [1] https://www.gov.uk/stamp-duty-land-tax-rates https://www.gov.uk/stamp-duty-land-tax-rates
- walshemj 13y ago
  Actually a lot of the more expensive property is owned via trusts which avoids stamp duty. And if you are renting out you set up a company to do this and pay your self mostly via dividends
  - tehwalrus 13y ago
    Alas, I'm sure there are ways around it. This is mostly why I'd classify any time money went from a "company" into a personal bank account as "income" and tax all that at one rate - dividends, salary, rent, all one income. The one thing I'd allow to be exempt would be pensions contributions - which you will pay tax on later when you draw them out again anyway. I wish politicians could see past all the separate groups of voters they can bribe with exceptions and tax credits and just implement something simple and cheap to administer - more money for public services, less faff.
    - walshemj 13y ago
      To simplistic it doesn't reward investment risk in companies over safer investments in say government gilts.
      - tehwalrus 13y ago
        If markets work, you don't need to incentivise - Risky investments pay out more when they do succeed. If markets don't work yet, fix the failures with regulation until they do. No need to incentivise behaviour through taxation. edit: my principal reason for believing it's better to do things this way round is cost: re-writing the rules only costs you (us, the government) money once, and it works forever. Writing an exception in costs you money once to write the exception, plus every year in lost revenue. TL;DR - laws = code, exceptions = CPU-hours.
fpp 13y ago
A bit more background on the numbers mentioned in the article and some personal thoughts: - Non-mortgage sales of houses/flats in the highest price areas in central London (e.g. SW1 / SW3, SWxx plus parts of inner, East and North London) are now more than 80% (that is most likely the cash figures referred to) - people / non-first time buyers are shelling out funds here of almost always more than £1M for small flats - houses from £2M - both up to £30M and more) - The total number of property sales is about 50%-60% of the volume of pre-2008/9 sales. Given the broad scale of house prices in London (e.g. £1M - £30M+) and similar high prices in some of the fringe areas (where top price areas also command house prices > £20M), IMHO this only means that there is massive (almost tax-free) inflation-hedging for many that are profiting from the gains of the financial markets in the last years / decades - in other words £1M is the new £100K from e.g 20 years ago. While the times might have passed when buyers showed up with bags full of cash and could legally buy real estate in the UK / London - no questions asked rendering all global money laundering regulations nil and driving property prices up to previously unseen levels (the commonly used cliché would be a Russian "business-man", but same applies to anywhere where people got hold of truckloads of cash from whatever sources), the UK/London is still a tax heaven for many, particularly European buyers (e.g. Germans because of loopholes in tax legislations / double taxation laws can reduce their taxes massively some close to zero). Besides the above I believe the following key drivers are visible: - Central locations in mega-cities like London are getting more and more expensive by the sheer demand (more people than 20 years ago, globalisation) and limited supply. - Since years in the UK, many, that have made huge profits in financial markets, have exchanged those into tangible assets like property - another indicator for that would be land / country estates with large amounts of land all selling at multiples of years ago. This is not the first time this has happened, in centuries before whole areas in London were built by financial investors / people that have profited from massive financial gains e.g. on the stock exchange. IMHO this also clearly demonstrate that many of those DO very well know they are trading hot air. - Most of the middle-class children/20s today will be substantially poorer than their parents as they will not be able to participate / gain profits e.g. in housing, but instead will have to pay substantial amounts of their income (if not inheriting a property) for living / housing expenses. One more reason for this is also that huge financial profits today are not shared as broadly as these were e.g. 10 years ago via bonus pays, salaries. Generally speaking (all the above epitomized) - if you don't have the money to live comfortably in London but have to work for it, London becomes less-and-less attractive now even to middle class people with income levels beyond £150K p.a. - others in services jobs, nurses, teachers, etc are since years not able to live in London anymore - add the changes in living subsidies since April this year when the UK started to "deport" low income families from London to Manchester, Birmingham, the North, the recent Red Cross figures of more than 100 Million people in Europe having no money to buy food and you get a more holistic picture what actually is happening.
csomar 13y ago
Sorry, the Stats tell you otherwise: http://www.london.gov.uk/shaping-london/london-plan/facts/ http://www.london.gov.uk/shaping-london/london-plan/facts/ London is adding more people. It's just the OP and his friends who left.

133 points by kpozin 13y ago

deleted 13y ago

[deleted]

I'm about to give up on London and move to San Francisco. Both cities are experiencing 10%+ house price inflation and all the pain that goes with it. New York has experienced much the same since the 2008 housing crash. Cities are in, suburbs are out. So I have trouble buying the hypothesis that London's increase is due to its use as a quasi-currency or foreign demand. The demand to live in London and other world cities is common and organic. I don't doubt the UK's retrogressive tax policies encourage more investment than normal but that's not the centre of the demand, nor are Eric Schmidt or Michael Bloomberg legitimately competing with me for housing.

timthorn 13y ago
I work in London but couldn't imagine living there - not because of the cost but because it feels so claustrophobic. I live in the Suffolk countryside, and am grateful every evening when on the train that I can escape. Cambridge is close enough to provide most of the amenities of London but on a human scale.
- porker 13y ago
  I'm glad you can afford it. We'd like to move to Cambridge but the house prices are even more than where we are in the South of England. We're having to think of somewhere further north or less sexy...
  - gjm11 13y ago
    I'm pretty sure timthorn means he's living (not in Cambridge, but) somewhere in Suffolk, and can go to Cambridge for shopping, cultural events, etc., in the same sort of way as someone nearer London might go to London. Cambridge itself has really expensive housing, not as bad as London but still very bad; think San Francisco as opposed to New York. But there are plenty of places within reasonable reach of Cambridge that are much more affordable. I live in a nice village about 7 miles from the centre of Cambridge, and prices there are 2-3 times cheaper than in the centre; move further out to somewhere that's not so much "one of the villages around Cambridge" and prices go down by another 1.5-2x.
    - timthorn 13y ago
      That's exactly it. I'm in not-so-much-one-of-the-villages-around-Cambridge.
      - deleted 13y ago
        [deleted]
codex 13y ago
Cities have been "in" since the industrial revolution. What's different this time?
- busterarm 13y ago
  Actually it totally cycles. Availability of cars as well as a government policy encouraging home ownership (cheap loans) created a shift of people moving out to suburbs. If you're really familiar with the biggest cities, you can see this shift over time and it happens with subways and commuter rail lines too. Certain areas of New York's outer-boroughs have seen large shifts in class/demographic over the past 200 years. Coney Island used to be a resort/hotel town for the mega rich. With cars and the completion of major highways, the rich moved out to Westchester and Long Island. The subway eventually reached Coney Island and it became a poor neighborhood. It is now starting the swing back the other way because of new construction and the convenience of the Q line. The biggest shift happened right around when the subway lines were first connected at Times Square and the companies merged.
- bodyfour 13y ago
  Look back 30-40 years: * Places like the Lower East Side of Manhattan were magnets for broke artists because they were dirt cheap places to live. * San Francisco neighborhoods like SOMA were similarly inexpensive. A few people with meager incomes could go in together and rent a warehouse to live in. * London had numerous squats: housing stock so unvalued that it wasn't worth stopping people just moving in for free. Think about property values in those places today. In the past 60 years we've witnessed a remarkable cycle. First you had the "white flight" to the suburbs starting in the late 1950s or so. By 1980 the general consensus seemed to be that central cities were doomed forever to poverty. Now the trend is reversed and people want to pour back in. However, the regional population is much larger than when this cycle started so central housing has become a scarce resource. The article is mostly about forces particular to the London market though. It is amazing how high property values have gone there. I live in San Francisco so I think I'm fairly accustomed to high prices, but visiting London and seeing mews houses going for £3m still blew my mind. Another peculiarity of the UK market is that a lot of property trading are just leaseholds, so you don't even really own the house after you "buy" it. (There are "freeholds" for sale as well, but that's even more expensive) Lovely city, but it does make you poor.
objclxt 13y ago
>I'm about to give up on London and move to San Francisco It seems to me, having lived in both, that they have very similar problems. Both London and SF have a significant wealth gap. Property is even worse in SF: prices are generally speaking more expensive (mainly due to far less supply than London), and average rent is higher. What I'm getting at is if you agree with the op-ed and want to give up on London why would you choose a city which has a very similar set of problems?
- bencoder 13y ago
  I can't speak for the OP, but check the salary differences between the two cities. The higher prices in SF may be offset.

thrill 13y ago

No one lives in London (San Francisco, New York, Hong Kong, etc.) anymore - it's too crowded there.

rquantz 13y ago
Because more and more people live in London (San Francisco, New York, Hong Kong, etc.) now - it's too crowded there. Ftfy. How can they be crowded if no one lives there anymore? Or are you suggesting they're crowded with things other than people?
- joseph_cooney 13y ago
  It's called a joke. There is probably a few TED talks that you can listen to to explain it.
  - deleted 13y ago
    [deleted]
  - levosmetalo 13y ago
    If you need to explain a joke it's a pretty bad joke. Besides, it was maybe interesting to some people when used first million times, but now, I wish I could downvote ...
    - lotsofcows 13y ago
      That's one possibility... You just prompted me to upvote.
- matznerd 13y ago
  ftfy... On why he no longer went to Ruggeri's, a St. Louis restaurant: "Nobody goes there anymore. It's too crowded."[2] http://en.wikipedia.org/wiki/Yogi_Berra#Examples http://en.wikipedia.org/wiki/Yogi_Berra#Examples
- oscargrouch 13y ago
  This reminds me: Who's on First [1] [1] http://en.wikipedia.org/wiki/Who's_on_First%3F http://en.wikipedia.org/wiki/Who's_on_First%3F

codex 13y ago

This kind of housing boom is a direct result of the concentration of wealth in the top 1%. As wealth concentrates, the things that rich people buy inflate in price.

cschmidt 13y ago
I believe the overwhelming majority of the buyers at the top end of the London market are foreign. So it does have something to do with wealth distribution, but not the distribution in Britain.
chuable 13y ago
So you don't think it has anything to do with easy access to credit and loans?
- TruthElixirX 13y ago
  Or building codes restricting things to an arbitrary height, or the fact that the aristocracy still owns the majority of the land in the U.K[0]. [0]http://www.independent.co.uk/voices/commentators/johann-hari/britains-land-is-still-owned-by-an-aristocratic-elite--but-it-doesnt-have-to-be-this-way-483131.html http://www.independent.co.uk/voices/commentators/johann-hari...
  - jkldotio 13y ago
    It's probably best not to cite Johann Hari* given there are probably other sources able to establish the same point. *https://en.wikipedia.org/wiki/Johann_Hari#Journalistic_controversy https://en.wikipedia.org/wiki/Johann_Hari#Journalistic_contr...
- busterarm 13y ago
  These people had easier access to loans anyway because of their ability to pay. All the subsidy does is make it a no-brainer when it comes to where to invest their money. People put their money into whatever gives them the best ROI and for the last decade or so that's been real estate. All it does though is drive prices up and the middle class out.

walshemj 13y ago

The elephant in the room is moving out of London for the schools - less "ethnic" kids

chuable 13y ago
It appears that sort of thinking puts one in the minority: http://www.theguardian.com/commentisfree/2013/apr/22/multiculturalism-won-uk-move-on http://www.theguardian.com/commentisfree/2013/apr/22/multicu...
- omonra 13y ago
  And yet everybody who can afford it, sends their kids to private schools in London. Heck - I know people who sold their house so that they could pay for private schools.
  - to3m 13y ago
    The intent usually seems to be to get one's chidren surrounded by primarily middle-or-better class children, not to keep their schooling racially and culturally pure.
    - yetanotherphd 13y ago
      I don't think the original post indicated a desire to keep one's children "racially and culturally pure" but rather to avoid sending one's children to schools with large number of non-Whites, for any number of reasons.
  - crdoconnor 13y ago
    The rich "ethnic" foreigners also send their kids to these schools, so it's not exactly an escape from non-white children.
    - omonra 13y ago
      It's not a race thing but rather class. People want their children to go to school with отчер kids who are smart / motivated to succeed - hence will focus on school. Best determinant of that are the parents themselves. So private schools end up being essentially a sieve that checks parents. In the US parents move to the suburbs with high local taxes that fund good schools for the same purpose.

knassy 13y ago

Olicarchification, the new gentrification, is a bitch. What do all of these "successful 'creatives' (architects, cinematographers, commercial and television directors, etc.)" think happened to the people that were living there before them?

yetanotherphd 13y ago
I think most people would be able to deduce that those people who were living there before moved somewhere else. If you can't use money to buy things that lots of people all want, why bother to earn the money in the first place?
deleted 13y ago
[deleted]
seiji 13y ago
Report: Nation's Gentrified Neighborhoods Threatened By Aristocratization: http://www.theonion.com/articles/report-nations-gentrified-neighborhoods-threatened,2419/ http://www.theonion.com/articles/report-nations-gentrified-n... (2008) "When you have a bejeweled, buckle-shoed duke willing to pay 11 or 12 times the asking price for a block of renovated brownstones—and usually up front with satchels of solid gold guineas..."
sliverstorm 13y ago
What do you mean the new gentrification? Creatives have always been a step in the march of gentrification, roughly approximated as "poor => creatives => wealthy"
- knassy 13y ago
  That's exactly my point. The 'successful creatives' referred to don't sound like struggling artists and bohemians. It's interesting that the author doesn't acknowledge where they sit in this process.

drpgq 13y ago

The novel Capital by John Lanchester is a great look at a London street that was historically lower middle class but over time has become upper class.

aaron695 13y ago

Lol, it's always funny to see people think the world will collapse when they leave, because they are the 'real' essence. And the fact they seem to think they had some sort of right to be there in the first place having themselves booted out the previous generation.

casca 13y ago

3 families are leaving London and that makes a trend? Comparing property prices in London to Williamsburg or SF and it looks like a similar trajectory to me. Cities are expensive because space is constrained (artificially in many cases) and lots of people want to live there. The author makes note of the low "property taxes" in London which is just spurious. In the US, property taxes are often used as a way to pay for many local and state government services for a number of historical reasons. This is often the only income that some states collect. In the UK, council tax is to pay for a much smaller set of services. A £5m house does not generate 10x the garbage of a £500k house. It's a cheap shot that tries to make a false point for US readers. It's true that the current state of the global economy has meant that fearful foreigners have brought their money and bought property, but this tends to be at the very high end of the market which shouldn't be affecting the middle class that he's referring to. Greater demand by many people wanting to live in one of the world's great cities might.

crdoconnor 13y ago
>Cities are expensive because space is constrained (artificially in many cases) and lots of people want to live there. That has ALWAYS been true, so cannot possibly account for today's prices. The last decade's price increases have been driven by the lack of other perceived safe haven investments. Treasuries/Gilts pay below inflation now. That money found a new home: property in tier one global cities. >The author makes note of the low "property taxes" in London which is just spurious. Oh come on. Would high taxes on a house make it a more or less attractive investment? >A £5m house does not generate 10x the garbage of a £500k house. THIS is spurious. Irrespective of whether that's true or not (it's not: a £5m house probably takes up more valuable land, which is made valuable by everything surrounding it - transportation, shops, parks, etc.), it still doesn't change the fact that low taxes make property a much more attractive investment. >It's true that the current state of the global economy has meant that fearful foreigners have brought their money and bought property It's foreigners who have checked out every other safe investment and seen how pathetically they pay. Seen the interest rate on Gilts? Some are also (rightly) fearful of their home governments (Russians, Chinese, Arabs), and want to park their money in a country where the government is unlikely to decide to confiscate it one day. >this tends to be at the very high end of the market which shouldn't be affecting the middle class that he's referring to. Except: A) It does affect the middle classes too. Prices filter down. Everybody who was buying at the high end of the market and gets priced out buys something lower down, which prices them out and so on. Land used on expensive properties is not available for the middle classes. B) It's not just the very high end of the market. London property is being shopped all around the world, from Singapore to Hong Kong to the US as a safe investment for upper middle classes. I could show you a hundred glossy foreign magazines advertising property which is "close" to some tube station on the Piccadilly or Northern line 13-15 stops from the center.

foobarian 13y ago

The property taxes cited are fascinating. $3k per year on a 20 million dollar home??? As they say, there's your problem right there. I've come to appreciate the extent to which property taxes drive a country's culture or system of living. I grew up in an eastern European country where property taxes don't exist, and so there are tons of people who live in quite posh inherited/grandfathered-from-communist-times residences while receiving tiny incomes in comparison. Meanwhile the property tax rates common in the U.S. tend to drive out people who stop being able to afford to live in a locale.

to3m 13y ago
The UK does not have property taxes. The figure given is presumably council tax, which is a fixed fee per household, vaguely based on the house's supposed value. The highest council tax band is quite low; i pay £2,000 per year, and my flat is worth a lot less than $20m.
- bencoder 13y ago
  Also council tax is paid only by the resident, not by the owner, so it's not felt by foreign owners if they are renting it out, or even if it's empty.
  - frobozz 13y ago
    This is correct about rented properties, but not about empty ones. Empty properties can attract a discounted rate of council tax, but are only exempt under certain circumstances (resident in prison/hospital, house unlivable). Long-term empty properties can even attract a higher rate of council tax.
  - chuable 13y ago
    That last part is simply incorrect; Councils have a time limit on whether empty properties are exempt from council tax. Also, there's an extra 50% penalty if it's been empty/unfurnished for 2 years or more: https://www.gov.uk/council-tax/second-homes-and-empty-properties https://www.gov.uk/council-tax/second-homes-and-empty-proper...

Theodores 13y ago

The problems of the London (and UK) property market go back to the days of Margaret Thatcher. Selling council homes, abolishing rates and low interest rates and deposit requirements have stacked the cards in favour of the few. Effectively we are borrowing from the grandchildren with the property bubble. The property bubble received a boost with the dot com crash as it was the only outlet for speculative capital. There have been some dips, however, house price inflation is never seen for what it is - inflation. In fact it is kept out of the headline inflation figure. You can have housing go up 10% a year and inflation be at 2% - notionally. When 25-33% of people's income is spent on housing you would expect that if that cost goes up 10% then the overall inflation would go up by at least 2.5% even if everything else, e.g. food and fuel was static. In the UK we need to look at what our European neighbours do and borrow a few ideas from here and there. For instance in Switzerland foreign nationals need to live there for five years to buy a house and even then they have to actually live in it rather than rent it out. They also have a sizeable tax on owning a property equivalent to its rental value. Consequently the house price inflation in Switzerland is practically non existent and most Swiss people rent. They live like kings compared to most Londoners and don't have a bee in their bonnet about having to be 'on the housing ladder'. In a world where not everyone has a roof over their head, homes should be homes rather than speculative investments for the work shy. Something has gone wrong with capitalism if it makes more sense to invest in property than to invest in the bank (low risk) or the stock market (some risk).

VLM 13y ago
"Something has gone wrong with capitalism if it makes more sense to invest in property than to invest in the bank (low risk) or the stock market (some risk)." This macroeconomic observation is probably the most important observation in the whole discussion. When the best thing a people can do with $1M is very expensively (high transactional costs) trade non-productive real estate with each other, that implies an economic collapse in the future, or at least an anticipated one. In a part of the world with (rightly?) more optimism, $1M would be dropped on something productive. Small business. Going in as part of a medium business. Stock in large businesses. Bonds in huge businesses. Productive assets of some sort not a depreciating liability like property. Now what happens to prices when that collapse occurs, and what is the demographic characteristics of the bagholders being set up to be holding the asset when it's price collapses?

baumgartn3r 13y ago

1) odd to find this on Hacker news 2) reads like a remix of David Byrne's recent article in the Guardian about NY [1]. Unfortunately, they both have a point. [1] http://www.theguardian.com/commentisfree/2013/oct/07/new-york-1percent-stifles-creative-talent http://www.theguardian.com/commentisfree/2013/oct/07/new-yor...

ballard 13y ago

I've lived in Shepherd's Bush and to the south by train. The commute from the 'burbs is grueling, but the cost differential is hard to ignore. (Hotels in London are naked extortion.) The palpable sentiment is the average person is walking a razor-thin financial tightrope.

ChuckMcM 13y ago

Interesting, I strongly suggest that the City change its taxing strategy. Seriously. If you get proper property taxes and you don't need the services because the people don't actually live there, then that just accrues to the benefit of the less well off. It also mitigates the challenge of finding housing since the taxes will balance out with quality of life improvements. Its also an exceptionally straight forward way to "tax the rich" as it were.

peteretep 13y ago
The City with a capital C is something different in London, a distinction that's made in the article itself.
Jamiecon 13y ago
It's a straightforward way to tax people who have homes that are worth a lot of money. Not entirely the same as being rich. What if you live in one of the leafier parts of the east end, where only 30 years ago you could buy a house on a blue-collar wage. Now your house is worth more than £1m. But you're retired and on a basic state pension. You don't want to move to a cheaper area because your friends and family live close to you and are able to support you. High property taxes based on the value of your assets would force you to move away or re-mortgage. Not ideal when it comes to maintaining a sense of community or caring for the elderly. I assume by 'proper' property taxes you mean 'the way the US does things'. I'm not sure that it would work in the UK with our different economics, system of government and geography.
- eli_gottlieb 13y ago
  >What if you live in one of the leafier parts of the east end, where only 30 years ago you could buy a house on a blue-collar wage. Now your house is worth more than £1m. But you're retired and on a basic state pension. You don't want to move to a cheaper area because your friends and family live close to you and are able to support you. Then you are making very inefficient use of an extremely scarce resource. Economically speaking, you should get out of the way and let someone more productive have that property. Morally that might be wrong, but I think you should be able to argue for why we should adopt policies that sound morally right but have nasty economic consequences. >I assume by 'proper' property taxes you mean 'the way the US does things'. I'm not sure that it would work in the UK with our different economics, system of government and geography. Why not a simple land-value tax?

richliss 13y ago

To live in Central London without really worrying you have to be in one of two camps; the rich or the poor. The rich of course will continue to use their capital to skim the profit and secure their status, and the poor will continue to vote in councils that provide social housing and benefits. I'm one of those who is in the middle and work; I rent in an up-and-coming area (i.e. people look down on it until they come here) and rent is going up 8 times salary. We are already at rent being 30% of combined salary. I won't be in a position to get social housing, so I'll be forced to move in a few months either further out (so travelling will take longer and be more stressful, and the working day longer) or move somewhere less appealing. Property in London is controlled by the super rich who realise its easier to have their current investments increase in value by lack of supply than it is to fund property development. The shortfall in housing in London will be one million homes by 2022! The free market is supposed to mean that supply will rise up to meet demand where possible. The little property development that does go on is usually done by block selling hundreds of apartments in new builds off plan to investors from Asia/Nigeria etc. who in turn get them rented out, or insane apartments that are sold to Russians and Arabs for £100m+ pulling all other property prices up. I think that early stage tech entrepreneurship in London will be a rare thing unless you can live in your parents house and live like a student in the near future, or you will end up giving away so much capital just to survive. The more I read about Berlin the more I see it as being the future of tech in Europe; creative, cheap property and offices (in comparison), intelligent people and cosmopolitan.

wowfat 13y ago
" I rent in an up-and-coming area (i.e. people look down on it until they come here)" - what area are you renting in?
- richliss 13y ago
  Stockwell
frobozz 13y ago
The poor camp is even smaller. It's not just those who are poor enough to be eligible for social housing, but those who are lucky enough to get it, or unlucky enough to really, really need it.

jasonkester 13y ago

Funny, we saw this exact same article come through a few months back about Paris. It's the same story: All the trendy rich people that displaced the poor bohemians and gentrified the neighborhoods are now being displaced by even richer people. It makes for good ironic commentary, so it plays well here. I suspect we'll see the third part of the trilogy about New York come through by the end of the year.

epsylon 13y ago
I currently live in Paris and that's exactly what I was thinking while reading the article. Except maybe for the taxes which may be a little higher in France, the situation seems nearly identical. In the last decade, prices in the whole capital have doubled.
barrkel 13y ago
The article risks conflating two separate trends. People with children don't really want their children to grow up on the streets of London. As the article writer gets older, he'll know more and more people with children moving out, independent of house prices. The other bit, the silly prices paid for unoccupied houses, is mostly concentrated in central London, and a few bits in close proximity to the west, north and south. There are still plenty of less desirable neighbourhoods.
- mathattack 13y ago
  One could substitute Manhattan too. This seems to be true of many high culture cities, perhaps as a result of the global investment environment.
pantalaimon 13y ago
The same is happening in Berlin, still at an early stage compared to Paris or London, but the trend is clear.

guard-of-terra 13y ago

Moscow realty is Russia's reserve currency for ten years now, what's so surprising with London? "They accept that their children will never be able to afford to stay on in the city." The reality of new middle ages when who you are is defined by what you inherited, not by your skills.

eli_gottlieb 13y ago
So you're just going to let the Western world move into a "new Middle Ages", then?

kingrolo 13y ago

A great thing about moving to the suburbs (from Zone 2 to Zone 5) which I didn't consider before, was that now in the morning I always get a seat on the train, so I can immediately get my laptop out, and the journey disappears. Definitely worth the extra 7 minutes train journey for me.

gotofritz 13y ago

A lot of people move out of London when they have children. Inner city schoolkids are scary, many don't want their children growing up being mixed up with gangs. I know I didn't.

duiker101 13y ago

Matt moved from London to Cambridge? Not that the prices here are so much better.

robmcm 13y ago

One soultion would be to have a tax on empty properties, and tax rental income in bands simular to tax duty. This would then make property a worse investment, and increase the supply for people buying. Obviously you would want this to come in slowly so it doesn't cause a crash. I guess government isn't around long enough to do this, and no one wants a crash on their watch, so are happy to let it continue.

tehwalrus 13y ago

the tax figures quoted are nonsense. They are for council tax - paying to have your bins collected, and in London only the subsidy for the tube and busses - not all the taxes you have to pay for living in the UK. If you rent the property, your rent income would be subject to income tax which is a % of the income (depends on the total income, but for large enough values will be 40%.) Additionally, when you buy or sell a house, you must pay "stamp duty", which is a percentage of the sale value, and for a £30m house would be 7%, or £2.1m [1]. [1] https://www.gov.uk/stamp-duty-land-tax-rates https://www.gov.uk/stamp-duty-land-tax-rates

walshemj 13y ago
Actually a lot of the more expensive property is owned via trusts which avoids stamp duty. And if you are renting out you set up a company to do this and pay your self mostly via dividends
- tehwalrus 13y ago
  Alas, I'm sure there are ways around it. This is mostly why I'd classify any time money went from a "company" into a personal bank account as "income" and tax all that at one rate - dividends, salary, rent, all one income. The one thing I'd allow to be exempt would be pensions contributions - which you will pay tax on later when you draw them out again anyway. I wish politicians could see past all the separate groups of voters they can bribe with exceptions and tax credits and just implement something simple and cheap to administer - more money for public services, less faff.
  - walshemj 13y ago
    To simplistic it doesn't reward investment risk in companies over safer investments in say government gilts.
    - tehwalrus 13y ago
      If markets work, you don't need to incentivise - Risky investments pay out more when they do succeed. If markets don't work yet, fix the failures with regulation until they do. No need to incentivise behaviour through taxation. edit: my principal reason for believing it's better to do things this way round is cost: re-writing the rules only costs you (us, the government) money once, and it works forever. Writing an exception in costs you money once to write the exception, plus every year in lost revenue. TL;DR - laws = code, exceptions = CPU-hours.

fpp 13y ago

A bit more background on the numbers mentioned in the article and some personal thoughts: - Non-mortgage sales of houses/flats in the highest price areas in central London (e.g. SW1 / SW3, SWxx plus parts of inner, East and North London) are now more than 80% (that is most likely the cash figures referred to) - people / non-first time buyers are shelling out funds here of almost always more than £1M for small flats - houses from £2M - both up to £30M and more) - The total number of property sales is about 50%-60% of the volume of pre-2008/9 sales. Given the broad scale of house prices in London (e.g. £1M - £30M+) and similar high prices in some of the fringe areas (where top price areas also command house prices > £20M), IMHO this only means that there is massive (almost tax-free) inflation-hedging for many that are profiting from the gains of the financial markets in the last years / decades - in other words £1M is the new £100K from e.g 20 years ago. While the times might have passed when buyers showed up with bags full of cash and could legally buy real estate in the UK / London - no questions asked rendering all global money laundering regulations nil and driving property prices up to previously unseen levels (the commonly used cliché would be a Russian "business-man", but same applies to anywhere where people got hold of truckloads of cash from whatever sources), the UK/London is still a tax heaven for many, particularly European buyers (e.g. Germans because of loopholes in tax legislations / double taxation laws can reduce their taxes massively some close to zero). Besides the above I believe the following key drivers are visible: - Central locations in mega-cities like London are getting more and more expensive by the sheer demand (more people than 20 years ago, globalisation) and limited supply. - Since years in the UK, many, that have made huge profits in financial markets, have exchanged those into tangible assets like property - another indicator for that would be land / country estates with large amounts of land all selling at multiples of years ago. This is not the first time this has happened, in centuries before whole areas in London were built by financial investors / people that have profited from massive financial gains e.g. on the stock exchange. IMHO this also clearly demonstrate that many of those DO very well know they are trading hot air. - Most of the middle-class children/20s today will be substantially poorer than their parents as they will not be able to participate / gain profits e.g. in housing, but instead will have to pay substantial amounts of their income (if not inheriting a property) for living / housing expenses. One more reason for this is also that huge financial profits today are not shared as broadly as these were e.g. 10 years ago via bonus pays, salaries. Generally speaking (all the above epitomized) - if you don't have the money to live comfortably in London but have to work for it, London becomes less-and-less attractive now even to middle class people with income levels beyond £150K p.a. - others in services jobs, nurses, teachers, etc are since years not able to live in London anymore - add the changes in living subsidies since April this year when the UK started to "deport" low income families from London to Manchester, Birmingham, the North, the recent Red Cross figures of more than 100 Million people in Europe having no money to buy food and you get a more holistic picture what actually is happening.

csomar 13y ago

Sorry, the Stats tell you otherwise: http://www.london.gov.uk/shaping-london/london-plan/facts/ http://www.london.gov.uk/shaping-london/london-plan/facts/ London is adding more people. It's just the OP and his friends who left.