Now that the middle class squeeze has become my sujet du bore at the fancy north London dinner parties I attend, I was interested in Saturday’s New York Times piece about what foreign billionaires are doing to our insane property prices. One statistic really stuck out: ‘An astonishing £83 billion worth of properties were purchased in 2012 with no financing — all cash purchases. That’s $133 billion.’
Crikey. Author Michael Goldfarb argues:
‘And as for services, the minimal tax paid by those who have made property into money means that a city whose population has increased by 14 percent in the last decade can’t afford to build new schools. There will be a capacity shortfall of an estimated 90,000 places by 2015. Children won’t be turned away from school, but class sizes will grow to untenable proportions.’
And he laments:
‘The delicate social ecology that made London’s transformation into a great world city over the last two decades is past the tipping point, I fear.
For the quarter of a century I have lived here a sense of community has defined my life. A very organic sense of London pride has allowed this city to withstand substantial shocks — some welcome, like its transformation into a true cosmopolis; some unwelcome, like jihadist terrorism.
Now it is beginning to feel that the next phase of London’s history will be one of transience, with no allegiance to the city. I wonder whether those just parking their money here by buying real estate will ever be able to provide the communal sensibility to help the city survive the inevitable shocks it will experience in years to come.’
It is hard to argue with any of that. As Charles Moore once observed, the London property market is the world’s largest money-laundering operation. How, I wonder, does this benefit Londoners, except for the increasingly small group of wealthy property owners? It also strongly resembles a bubble, which is why I have little confidence in George Osborne’s economic policy and why talk of a recovery reminds me of those spoof Onion headlines from 1929. (‘Stock Market Invincible: “Buy, Buy, Buy!” Experts Advise’.)
And the property bubble goes hand-in-hand with another bubble, the subject of my previous sujet du bore. Both the property and immigration bubbles are essentially Ponzi schemes that depend on attracting respectively capital and labour from abroad. Both benefit the super-wealthy. Both ultimately lead to untenable pressure on the city’s services and infrastructure. The two are also directly linked — immigration contributes to rising house prices, although it is by no means the largest factor.
They have similar and interlinked social effects, too, so when middle-class liberals read that NYT piece and agree about the ‘social ecology’ of the city being damaged, of its turning into a ‘transient place’, they should maybe put themselves in the shoes of the people of Barking and Dagenham, where a third of a long-established white British population left between 2001 and 2011. Their fragile social ecology has been shattered.
We find it easier to talk about the housing side because we do not see millionaire Russians or Greeks as automatic victims, whereas the poor Somali and Bangaledeshi populations of east London are, in the Liberal Middle Class mindset.
I’m afraid the only conclusion I can reach is that this is partly due to moral cowardice and moral vanity, the main failing of the LMC (who are otherwise generally splendid people). LMC folks who can no longer afford nice bits of London can’t even admit to themselves why they’re prepared to move all the way out of town (with Britain’s train network) rather than to a London postcode where housing is relatively cheap but where they might suffer the alienation and fear of being a minority.
There’s been an exodus of middle-class Brits from London this century, but it can’t all be attributed to oligarchs pushing up prices; allowing parts of the city to become dominated by poor, often unskilled immigrants from developing countries has also raised the costs of failure (or what our house price-dominated society now deems failure). This is not to blame anyone; neither the rich Russian nor the poor Bengali immigrant working every hour God gives for his family is at fault for the drastic change of our city, but they’re part of the crummy game we’re all forced to play.
By opening up the city to the world, as Boris Johnson keeps boasting about (this week to the Chinese), London has become far more competitive than it once was, but also far less relaxed, and far more stratified and unequal. That is why we have, on the one hand, people living in sheds, and on other, as the Ham and High reported last week, parents camping out overnight to get their kids into a good school.
Maybe our city is a world class megalopolis, but who wants to live in a place like that?Tags: Barking, George Osborne, Housing, Immigration, London, Middle class, Society