London’s housing market has changed quite a bit in the past 2 decades, and not for the best. If the UK housing crisis is a dysfunctional family, the capital is the abusive, alcoholic father who gets his belt out all the time. The star of an unfortunate freak show.
A study published this week by the Evening Standard Homes and Property section highlights just how ridiculous the extent of the damage is.
In 1996, the average London home cost £79k. Today, prices have increased by 518% on average to £488k. Admittedly, that is a lot to pay for a shower-equipped shoe box.
Thing is, that’s not the issue. Inflation always makes everything look expensive over time. That’s why old people do this annoying thing where they bang on about the rising price of milk. The real problem is wages have not come close to keeping up with the market.
In 1999 the average Londoner earned £22k compared to 36k today, only a 47 per cent increase. So basically, property prices have soared 11 times faster than incomes. Yep, that’ll do enough to push most off the ladder.
The rental market
Another fun one. In 2001 just 15 per cent of Londoners rented — it was what you did for a few years before you bought a flat.
Now, around 1 in 3 residents belongs to what is increasingly called Generation Rent, or as I candidly call it Generation ‘never mind, you’ll have to wait til your parents die if you’re lucky’. If the private rental market continues to go on unregulated, the high prices paid by tenants will continue to prevent people saving up to buy.
It will preserve the status quo and class divide between renters and owners. And let’s face it, this country is pretty awesome at safeguarding class divides.
First time buying
In 1996 an average first-time buyer borrowed £55k and earned £21k. Today’s first timers earn £51k and borrow £174k. The average deposit is now £96k. Although this average is pumped up by the extravagant properties of central London which only Russian billionaires seem able to afford, it’s still ridiculously high.
Most people now look at a deposit around 30-40k for even the smallest of flats, even at the furthest ends of the tube map.
Damage limitation or slowing the pace of market growth is no longer sufficient. If new mayor Sadiq Khan and government cannot work together to build genuinely affordable homes on a large scale while bringing extreme restrictions onto the capital’s rental market, London’s social cleansing will continue.