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London's Great Exodus

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http://www.nytimes.com/2013/10/13/opinion/sunday/londons-great-exodus.html

OUR neighbors Lauren and Matt and their kids moved out of London to Cambridge the other week. Bibi, Andy and their two left for Bristol in June. Another of my 8-year-old’s classmates and her family are heading out after Christmas.

In my book this is a trend.

The moves are not examples of the life cycle of the striving middle classes. Nor are they examples of middle-class folks being thrown on hard times by the sluggish British economy. The families moving out had good incomes.

Matt, who had been looking for a house for more than three years, summed up the reason for leaving best: “I don’t want to be a slave to a mortgage for the next 25 years.” Given the astronomic rise in house prices here, he wasn’t speaking metaphorically.

This is what happens when property in your city becomes a global reserve currency. For that is what property in London has become, first and foremost.

The property market is no longer about people making a long-term investment in owning their shelter, but a place for the world’s richest people to park their money at an annualized rate of return of around 10 percent. It has made my adopted hometown a no-go area for increasing numbers of the middle class.

According to Britain’s Office for National Statistics, London house prices rose by 9.7 percent between July 2012 and July 2013. In the surrounding suburbs they rose by a mere 2.6 percent. The farther away from London you go, the lower the numbers get. When you finally cross the border into Scotland, house prices actually decline by 2 percent.

The gap between London prices and those of the rest of the country is now at a historic high, and there is only one way to explain it. London houses and apartments are a form of money.

The reasons are simple to understand. In 2011, at the height of the euro zone crisis, citizens of the two countries at the epicenter of the cataclysm — Greece and Italy — bought 400 million pounds’ worth of London bricks and mortar. The Italian and Greek rich, fearing the single currency would collapse, got their money out of euros and parked it someplace where government was relatively stable, and the tax regime was gentle — very, very gentle.

Considering that tax evasion in Italy and Greece was a significant contributory factor to their debt problems, it just seems grotesquely cynical to encourage this kind of behavior.

But that’s what Britain in general and London in particular do. The city is essentially a tax haven with great theater, free museums and formidable dining. If you can demonstrate you have a residence in another country, you are taxed only on your British earnings.

And the savings on property taxes are phenomenal.

The property taxes on Mayor Michael R. Bloomberg’s $20 million London home come to £2,143.30 per year. That’s $3,430. Clearly, the mayor bought in at the right time. The Google executive chairman, Eric Schmidt, is reported to be house hunting here — he’s looking in the £30 million (about $48 million) price range. Yet he will pay a similar amount in property tax.

The ripple effect of this frankly demented situation is felt all over town. The foreign rich and the City rich (there is some overlap) have made most of the center of London unaffordable to any but their own kind. Those who were once considered rich — in the top 10 percent of earners — now can barely afford to move to my neighborhood, where a typical row house, with three bedrooms (the third bedroom wouldn’t qualify as a closet in Manhattan) and a total living space of around 950 square feet tops a million dollars, three times what it cost in 2000.

THE overall economy of Britain certainly doesn’t justify these prices. Bank lending for businesses is flat, but mortgage lending? Hoo-ha, it’s soaring up and up, and the bulk of it is concentrated in London. It’s as if the whole British economy is based on housing speculation in the capital. David Cameron’s government seems to think that is the case. Mr. Cameron may be pursuing austerity policies elsewhere in the economy, doing virtually nothing to help subsidize employment or industry, but his government has just started a “Help to Buy” program. The government will guarantee up to 15 percent of the purchase price of a house up to £600,000 ($960,000), if you have a 5 percent down payment.

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This is a long running trend rather than something more recent. I lived or worked in London on and off for nearly 30 years and watched more and more areas empty out over that period. Back in 1985 it was only really the most expensive bits of South Kensington and Mayfair that were deserted most of the time whereas now there's whole tracts of London where houses cost millions at a minimum but where no-one actually lives full time.

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Guest unfunded_liability

...

The moves are not examples of the life cycle of the striving middle classes. Nor are they examples of middle-class folks being thrown on hard times by the sluggish British economy. The families moving out had good incomes.

Matt, who had been looking for a house for more than three years, summed up the reason for leaving best: “I don’t want to be a slave to a mortgage for the next 25 years.” Given the astronomic rise in house prices here, he wasn’t speaking metaphorically.

This is what happens when property in your city becomes a global reserve currency. For that is what property in London has become, first and foremost.

The property market is no longer about people making a long-term investment in owning their shelter, but a place for the world’s richest people to park their money at an annualized rate of return of around 10 percent. It has made my adopted hometown a no-go area for increasing numbers of the white English middle class.

...

Fixed. It's an uncomfortable fact that the indigenous English are fast becoming a minority in their own capital city. As someone that respects other cultures and religions it's very sad to see.

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This is a long running trend rather than something more recent. I lived or worked in London on and off for nearly 30 years and watched more and more areas empty out over that period. Back in 1985 it was only really the most expensive bits of South Kensington and Mayfair that were deserted most of the time whereas now there's whole tracts of London where houses cost millions at a minimum but where no-one actually lives full time.

And yet went to Cafe Spice in The minories edge of city near Tower Bridge. This area has been a wasteland for as long as I have lived in London - Full of old Insurance companies and Bank processing centres (Natwest Goodmans Fields).

It was teeming with normal life as it becomes more residential so just change I guess.

My system engineering patch in the 80's was W1, SW1 et al and I think the deserted bit you mention was bigger effectively Pimlico, Westminster, Mayfair, South and North Ken parts of Earls Court etc and then Holborn right up to the Euston Road.

The difference is Zone 3 wasn't affected by this madness and now it is where many families used to live.

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Good that it's made the NYT but so what? What's going to be done about it other than more words? Yak, yak, yak, that's what. Disgraceful situation, trickle down? Whatever.

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Fixed. It's an uncomfortable fact that the indigenous English are fast becoming a minority in their own capital city. As someone that respects other cultures and religions it's very sad to see.

The property market is no longer about people making a long-term investment in owning their shelter, but a place for the world’s richest people to park their money at an annualized rate of return of around 10 percent. It has made my adopted hometown a no-go area for increasing numbers of the white English middle class.

Hard to have sympathy when the middle class effectively kicked us working class out of Muswell Hill, Islington, Crouch End, Clapham Batteresea, Fulham etc etc with their ethnic cleansing gentrification led by skips in the 80's and 90's

In fact you will find many of us taking a certain schadenfreude pleasure in their squealing.

Edit - what the F*** is this sympathy for the white middle class? They hated everything we stand for. North London in the 60's and 70's was one of the best examples of everyone just getting on from Greeks and Turks to my Indian and Black friends in our S***hole sink comprehensive.

Edited by Greg Bowman

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Good that it's made the NYT but so what? What's going to be done about it other than more words? Yak, yak, yak, that's what. Disgraceful situation, trickle down? Whatever.

Well as is land in London appears to be valued so highly it would be a pity not to tax it so we can all share in the proceeds of the marvelous bounty rather than letting all the gains accrue to a few well heeled foreigners. I am sure that George Osborne will be addressing the issue just as soon as he gets back from his holiday on that Russian oligarchs yacht.

Edited by stormymonday_2011

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Hard to have sympathy when the middle class effectively kicked us working class out of Muswell Hill, Islington, Crouch End, Clapham Batteresea, Fulham etc etc with their ethnic cleansing gentrification led by skips in the 80's and 90's

In fact you will find many of us taking a certain schadenfreude pleasure in their squealing.

Edit - what the F*** is this sympathy for the white middle class? They hated everything we stand for. North London in the 60's and 70's was one of the best examples of everyone just getting on from Greeks and Turks to my Indian and Black friends in our S***hole sink comprehensive.

This is the sort of spiteful nonsense that is destroying this country.

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Fixed. It's an uncomfortable fact that the indigenous English are fast becoming a minority in their own capital city. As someone that respects other cultures and religions it's very sad to see.

"London is no longer an English city."

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This is the sort of spiteful nonsense that is destroying this country.

Because I don't identify with the middle class that is nonsense? The middle class used their financial muscle to elbow out working class families from homes in London starting in the 60's or deport them to settlements outside London in the New Towns.

The paradox now is white collar middle class professionals are under pressure like never before and working class skills are in demand lets face it you can't squirt a car body repair down the line to India or installing a new data room.

My City State is doing just fine and I am glad it is going from strength to strength. As for my country I have funded it as a Londoner for far too long.

If you think being middle at anything is something to aspire to - you are about to get a rude awakening.

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"London is no longer an English city."

It never was! It was the centre of the BRITISH empire not the English we never identified with that warm beer and cricket cliche.

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Guest unfunded_liability

The property market is no longer about people making a long-term investment in owning their shelter, but a place for the world’s richest people to park their money at an annualized rate of return of around 10 percent. It has made my adopted hometown a no-go area for increasing numbers of the white English middle class.

Hard to have sympathy when the middle class effectively kicked us working class out of Muswell Hill, Islington, Crouch End, Clapham Batteresea, Fulham etc etc with their ethnic cleansing gentrification led by skips in the 80's and 90's

In fact you will find many of us taking a certain schadenfreude pleasure in their squealing.

Edit - what the F*** is this sympathy for the white middle class? They hated everything we stand for. North London in the 60's and 70's was one of the best examples of everyone just getting on from Greeks and Turks to my Indian and Black friends in our S***hole sink comprehensive.

I was born and grew up in London, also went to a comprehensive school. There was always an 'englishness' to London that made it a very special place, despite the cr*p weather. And yes it was great having Sikh, Afro-Caribbean, Jewish neighbours and friends. But it still felt like England. For me it was one of the best cities in the world. That's gone now. I hope it's a transition phase onto something better, or maybe I'm just showing my age.

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I was born and grew up in London, also went to a comprehensive school. There was always an 'englishness' to London that made it a very special place, despite the cr*p weather. And yes it was great having Sikh, Afro-Caribbean, Jewish neighbours and friends. But it still felt like England. For me it was one of the best cities in the world. That's gone now. I hope it's a transition phase onto something better, or maybe I'm just showing my age.

I identify a lot with what you say, personally I think it is a transition and of course that might be some rose tinted specs. Maybe because I am only half British I have a different slant I don't know.

Edited by Greg Bowman

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And yet went to Cafe Spice in The minories edge of city near Tower Bridge. This area has been a wasteland for as long as I have lived in London - Full of old Insurance companies and Bank processing centres (Natwest Goodmans Fields).

Yes, I know the area well - it used to be pretty scary at night too. I think the general transformation probably dates back to the St Katherine Docks development and, dare I say it, News International setting up in Wapping. Last I heard they were planning on selling the site for housing and moving somewhere South of the River, which shows how much pressure there is on the centre.

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Yes, I know the area well - it used to be pretty scary at night too. I think the general transformation probably dates back to the St Katherine Docks development and, dare I say it, News International setting up in Wapping. Last I heard they were planning on selling the site for housing and moving somewhere South of the River, which shows how much pressure there is on the centre.

The strange thing is that Tobacco Dock White Elephant down the road is still derelict you would of thought it would be snapped up by now.

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Moving out to Cambridge for the lower prices? Not in the real world. A one-bed flat near the station in Cambridge is now a third of a million quid.

It's all relative. A small 3 bed terrace in a nice part of Cambridge will cost 400-500K, still an absolute shed-load, but the equivalent in London is 3 times that. Having said that, aside from Parkside College, the secondary schools in Cambridge are a disgrace so I'm not sure that people moving there to raise a family will get quite what they bargained for without also adding private school fees on top of their mortgage and railway season ticket costs.

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The strange thing is that Tobacco Dock White Elephant down the road is still derelict you would of thought it would be snapped up by now.

I think the problem is that it isn't for sale. I have a vague recollection of it being owned by a gulf state billionaire who seems to have forgotten about it. I could be imagining that though.

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Fixed. It's an uncomfortable fact that the indigenous English are fast becoming a minority in their own capital city. As someone that respects other cultures and religions it's very sad to see.

My god.

It's this kind of bigoted ignorance (shown by your insertion of the words "white English middle class" into the article) that is part of the problem. You think that because you are white and middle class that you deserve more than anyone else. You have a sense of entitlement and are part of the problem. You are entitled to nothing, just like everyone else.

You probably walk down the street in London looking at non whites and assume that they are all migrants, and have in some way had a role in making you unhappy with your life.

I myself am mixed race. Because I'm not white I'll bet that you would assume that I was a recent migrant to the country, here to inflate property prices and generally make your life worse.

Think again. I was born in London and am also a victim of this property balls up. I left the city I grew up in years ago because I was priced out. Skin colour has nothing to do with it.

And even if I was a recent migrant to the country. Do you think I'd be driving up property prices and generally screwing you over because I was buying up £500k rabbit hutches?

Do you think Marek the Polish plasterer (bad example as he's probaby white) is buying 3 bedroom houses in middle class areas and keeping the "indigenous" English out?

Are you pro whites or pro English? Or is your argument just b0llocks?

You should do some research you ignorant misguided lightweight.

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It is not the ordinary working people of LOndon form all parts of the planet that are driving the prices up....it is imported money, money made elsewhere and stored in London housing for safe keeping. ;)

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It is not the ordinary working people of LOndon form all parts of the planet that are driving the prices up....it is imported money, money made elsewhere and stored in London housing for safe keeping. ;)

Stolen rather than made, in most cases.

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My god.

It's this kind of bigoted ignorance (shown by your insertion of the words "white English middle class" into the article) that is part of the problem. You think that because you are white and middle class that you deserve more than anyone else. You have a sense of entitlement and are part of the problem. You are entitled to nothing, just like everyone else.

You probably walk down the street in London looking at non whites and assume that they are all migrants, and have in some way had a role in making you unhappy with your life.

I myself am mixed race. Because I'm not white I'll bet that you would assume that I was a recent migrant to the country, here to inflate property prices and generally make your life worse.

Think again. I was born in London and am also a victim of this property balls up. I left the city I grew up in years ago because I was priced out. Skin colour has nothing to do with it.

And even if I was a recent migrant to the country. Do you think I'd be driving up property prices and generally screwing you over because I was buying up £500k rabbit hutches?

Do you think Marek the Polish plasterer (bad example as he's probaby white) is buying 3 bedroom houses in middle class areas and keeping the "indigenous" English out?

Are you pro whites or pro English? Or is your argument just b0llocks?

You should do some research you ignorant misguided lightweight.

Good post.

Imo we’re seeing a rapid erosion of many commonly held misconceptions about people of a different ethnicity than the majority of English. The realisation that many long held beliefs were just complete B.S

I think some feel threatened by having to compete on a more level playing field where in the past they may have found it far easier simply by accident of birth.

Basically. Time for everyone find a new place in society and it may not be equal to that of your forebears!

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