London house prices push out the people the city needs most

It may have rained, but August in London was as rewarding as ever. There was the Summer Exhibition at the Royal Academy, including an extraordinary tapestry by Grayson Perry. There was the BP Portrait Award at the National Portrait Gallery.

There was enough dry weather to cycle on a rented bike around Green Park, Hyde Park and Kensington Gardens. And, having previously walked the Regent’s Canal west from Camden to Little Venice, this year we headed east to Limehouse Basin.

Parts are still gritty, but the surrounding neighbourhoods are being transformed: coffee shops, small business incubators and, everywhere, at the canal’s edge and further away, new apartment buildings.

As the cranes swing and the drills clatter, London’s housing shortage, you get the impression, will soon be at an end. Until you download the developers’ websites on your phone and see what these new flats cost.

Tiny apartments for £750,000. Family homes in the millions. This is in areas that, in recent memory, were poor and rundown. You can venture into neighbourhoods that still are, but you won’t do much better. The average London home cost £493,000 in February, according to the Office for National Statistics.

And renting is no easier, taking a large chunk out of all but the highest salaries. Average London rents grew by 3.2 per cent in 2014-15, compared with 1.5 per cent in the rest of England.

My colleague Tim Harford recently wrote that the reason London journalists write so obsessively about property prices is that the gap between their salaries and the cost of houses has never been higher.

This is true, but it points to a wider truth. It is not only journalists who are struggling to live in London. Many middle-class professionals are: teachers, university lecturers, doctors.

Look at the job ads. A senior house doctor in the urology department at University College Hospital: annual salary £30,002 to £47,175, plus a small London supplement.

Assistant professor in international political economy at the London School of Economics: £51,908.

Academic and health workers say colleagues with young families increasingly live outside London and commute in

It is difficult to see how the successful candidates will find somewhere to live in a city where house prices are many multiples of their salaries. Heaven help them if they have families.

It was not always this way. Twenty-four years ago, when we bought a house in one of London’s loveliest neighbourhoods, our neighbours were, and still are, people who do the jobs described in these ads. None of us could afford to move into the area now.

Does it matter to London? You would think so. The capital is home to Imperial College, University College London and King’s College London, ranked respectively joint second, joint fifth and 16th in the world in the QS Top Universities table.

London boasts some of the world’s leading research hospitals and scientific institutes. Who will staff them? And if well-qualified professionals cannot afford to live in London, what of all those essential workers on even lower salaries: nurses, ambulance drivers, firefighters?

You can argue that the capital is hardly emptying. The tube trains are packed, and not with the rich.

Is London actually short of key workers? There is a dearth of teachers, but that is true of the whole country. The number of entrants to teacher training has fallen 16 per cent since 2009-10, according to Ofsted, the school inspection service.

The vacancy rate for nurses at London hospitals is between 14 and 18 per cent, compared with 6 per cent in the north-east of England, according to the King’s Fund, a health think-tank.

But there is no shortage of doctors, at least at the consultant level. As the King’s Fund observed, senior doctors can also run a private practice.

King’s College London sent a slightly defensive response to my inquiry about recruitment difficulties, saying the capital’s living costs were in line with “any major global city”, that working in London brought huge advantages and that the college provided train ticket loans to those “living further afield”.

This appears to be key. Academic and health workers say colleagues with young families increasingly live outside London and commute in.

Perhaps the lure of London means people will always find a way to work here. Let us hope so. There is no future for a city without ambitious young people and their children.

michael.skapinker@ft.com
Twitter: @Skapinker

Letter in response to this column:

Businesses feel the brunt of housing shortages / From John Kent