London’s Tale of Two Cities: Inequality Worsens in Europe’s Booming Metropolis

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Two women drink wine at the Brixton Cornercopia kitchen and larder in the Granville Arcade in Brixton Village, England, on Jan. 28, 2012

Brixton Village these days is an unusual mix of multiethnic vendors selling groceries and homewares next to fashionable restaurants serving rosemary salt fries and a soon-to-open champagne and cheese shop and bistro. It’s a dramatic change for a south London neighborhood that over a decade ago was described by police as a “24-hour crack supermarket.” Homes here now go for an average of $708,000—about $63,000 shy of the London average. Slowly Brixton, which has been long known for its close-knit Afro-Caribbean community, has witnessed a steady influx of young, relatively wealthy middle-class professionals looking for a new place to call home. The demand for space has priced out those who can’t afford to stay; it’s a story being repeated across the British capital.

Dominic John, a 27-year-old who runs a vintage shop, Tique Booty, in the nearby Market Row, is happy to ride the wave of these changes. He’s just bought his first property in Brixton Hill because renting was too expensive an option. “We can talk about gentrification, re-gentrification, they’re all just buzz words that describe how organically we move out and places become overpopulated. That’s life. As a new business owner coming here, I think it’s a good thing,” says John. Adam Skidmore, a 43-year old artist and Brixton resident since 1997, says that while some of the developments have been good, the demand for fashionable Brixton has left many people behind. “I’m a typical Brixton local, I can’t afford to sit in a wine bar and drink $8 glasses of wine every day,” says Skidmore looking over at the champagne and cheese shop. Stefano Frigerio, the owner of Champagne + Bubbles, says however that he hopes to challenge locals’ perceptions of his shop as a “posh champagne bar” and that he chose Brixton because his business is a family business that is “unique and affordable,” like the area.

This question of affordability is on the mind of many Londoners; a poll from Ipsos Mori and the Chartered Institute of Housing in June revealed that four in ten Londoners are worried they will not be able to meet their rent or mortgage payments in the next year. The latest figures from the Office of National Statistics last month revealed that London house prices had increased by 10% in the last year, making the average house price in the capital almost twice the national average. At a time of austerity where incomes have either been stagnant or falling, the prodigious rise in property prices has unsettled many across the city.

Rowland Atkinson, an urban studies expert from the University of York, says that although “London has always been another country in terms of property values” compared to the rest of the U.K., concerns are intensifying about neighborhoods being bought up by the super-rich who pay little property tax and don’t spend time there. Taking account of housing costs, London has a 29% poverty rate, the highest in England.

The Smith Institute, a London-based think tank, agrees that foreign investors buying expensive property have caused London’s housing market to “become distorted and dysfunctional.” Paul Hackett, the director of the Smith Institute, estimates that overseas buyers capture around 85% of new-builds and 38% of re-sales, with many purchasing property as an investment rather than a home to live in.

Yolande Barnes, director of residential research at property agency Savills, disputes this notion: “The story of foreign owners leaving homes empty is exaggerated.” Irrespective of whether these buyers are staying in these homes or not, research from Savills suggests that London has changed as a result of their purchases. Barnes says that because the super-rich see London as a wise investment for property and given the city’s limited size, the wealthiest central neighborhoods—where average prices per home are over $1.1 million—have grown to include larger swathes of the capital.

The net effect is one of gentrification and displacement, as witnessed in Brixton. While the wealthy expand the pricier central neighborhoods from the inside out, those on middle or low incomes have been pushed into down-market areas further away from the centre, in turn pricing out the poor in those neighborhoods.

This phenomenon is common across major cities like Paris, New York and Berlin, as globally more and more people gravitate to cities. But in London, Europe’s fastest growing city, the problem is made uniquely more acute by the constraints of its metropolitan green belt—an inviolable stretch of green land that rings the city, designed to prevent urban sprawl. Paul Cheshire, professor Emeritus of economic geography at the London School of Economics, describes it as “a peculiarly English form of exclusionary zoning” and argues in a piece for the news website the Conversation that it is in part to blame for the housing crisis.

Saskia Sassen of Columbia University, a leading expert on cities, says that ultimately, the expensive price-tag that comes with living in London is bad news for the capital. She says what makes a city great “is the mix of it all, the possibility that even modest middle classes and poor artists can feel ‘this is also my city’.” But as London heads towards becoming a mega-city of 10 million people by the 2030s, the fear grows that, while London boosts its global image, its locals will suffer.