A melodrama with roots in reality.
Is London in danger of losing its soul? The question may sound melodramatic, but this is just what many of the British capital’s commentariat have been discussing over the past few days. The debate started with a widely shared New York Times Op-Ed piece, which asserted that London’s status as a clearing-house for international dirty money is warping its very fabric. Meanwhile in Monday's Guardian, another article – less eye-catching but also scathing – charted how Silicon Roundabout, London’s great tech success story, is itself being destroyed by the city’s property boom, as residential speculation pushes out affordable office rentals. Behind both stories lies a fear that is increasingly haunting the city: that London’s role as a safe haven for global money – especially through property investment – is making it increasingly unlivable. These articles have struck home because the vision of London they paint outline so many people’s fears. Even London’s laissez faire mayor has this year expressed concerns over London houses being treated as "blocks of bullion."
Barely a day goes by without a local news story about the phenomenal rise of London property values. In just the past few weeks, we've learned that price levels are "approaching madness." Depending on where you look, we will either see prices rise by a quarter in the next few years or precipitate a "Tokyo-style" crash. Next to professional spotters continually sniffing out the areas to which rapid price rises will come next, we find the Bank of England admitting that the boom is entirely beyond its control. Reports filter through of how the huge gap between London and the rest of the U.K. is only widening, as London buyers start to bid consistently 25 percent above the asking price. Such stories are not confined to property sections. With voter numbers falling hard in Central London’s most expensive areas, price rises are a political issue, and Mayor Boris Johnson is increasingly facing criticism for "selling the city to the highest bidder." Even international political stories are given a London property slant, with every bit of regional turmoil, whether it’s the Greek crisis or the current stand-off in Ukraine, pushing money towards the safety of the London market. It’s no wonder that the accusations in the New York Times have been greeted with such heightened sensitivity.
The fairness of the accusations leveled at London are entirely open to question, of course. The New York Times piece has been rightly and roundly mocked for its inaccuracies, not least over a description of life inside London’s Shard. Instead of the oligarch and prostitute-packed axis of evil the writer claims, London’s tallest skyscraper is in fact still almost entirely unrented and empty. Still, these ludicrous details wouldn’t have been seized upon with such pleasure had the article not touched a nerve. Londoners – even the broadly wealthier ones that make up the city’s media – are not just learning of London’s role as a global strongbox by hearsay, they’re experiencing it directly.
The potentially huge profits to be made from property are re-shaping the city from top to bottom. At the poorer end, we have “regeneration” schemes like this one that really mean the wholesale destruction of social housing and its replacement by speculative development. Further up the scale, we have huge tracts of London that, as the Financial Times noted last month, have rapidly shot beyond the reach of the middle class, speeded by a ripple effect that saw central London property values rise by 12.5 percent last year. Perhaps the greatest significance of the Guardian’s take on Silicon Roundabout’s demise is that it shows this process coming full circle. Tech companies here have long been criticized as agents or co-agents of social displacement in formerly working-class areas. Now they themselves are being forced out because selling residential property is currently an activity whose profits eclipse all others. As tributes to London’s role as an economic powerhouse go, this is a pretty twisted one.
But is London really different from any other successful city in this regard? A repeated critique of the New York Times piece is that it is just describing how major trading centers have worked throughout history. And another U.S. piece from last week that proclaimed London the “World’s Greatest City” ahead of New York solely for its popularity with the ultra-rich suggest the British capital isn’t the only place that has got its priorities skewed. It’s still hard to avoid the sense that the marrow is being steadily sucked from London’s bones, turning it into a place not just less affordable and more unequal, but also duller and more constricted. If the city’s ability to draw global capital is its sole criterion for success, London’s collective ethos may indeed be ready for a reboot.