Big Capital by Anna Minton — who broke London’s property market?
06-05-2017
How houses in the city went from being homes to financial assets
by: Nathan Brooker
If the price of food had risen at the same rate as London house prices over the past 40 years, then a chicken would now cost £100. That’s how deranged the city’s property market has become.
At the beginning of 1996, the average home for a first-time buyer in London cost 2.6 times the median salary; at the end of last year it was more than 10 times, and more than 30 in the wealthy borough of Kensington and Chelsea.What this shows is that the price of London property no longer bears any relation to wages, and certainly not to median wages.
Houses were once places where people lived; today, first and foremost, they are financial assets.In Big Capital, the journalist and academic Anna Minton seeks to explain why the property market is broken and who is to blame. In a slim, readable volume of fewer than 200 pages, she gives us a convincing account. The culprits make for a strong but familiar cast: Russian oligarchs, overseas investors, housebuilders, amenable MPs and estate agents. Illustrating the lengths to which luxury developers will go to get their projects approved, Minton speaks to a man from Brighton who was paid to attend a planning meeting and make positive noises about a new block of flats. Then there is the middle-class mother of two who, unable to afford the rent on a bigger flat, has been considering curtaining off an alcove in the hallway and putting a mattress in it, so that her seven-year-old daughter no longer has to share a room with her older brother. The mother describes it as Dickensian. She’s right.Minton comes out swinging punches. On page one she’s on a bus tour of London, with the guide pointing out property owned by overseas companies.
The “Kleptocracy Tour” takes us from Westminster to Highgate, past houses owned by the wife of a Russian minister, the son of a deposed African leader, and a Ukrainian oligarch who was arrested in 2013 on suspicion of corruption and forming a criminal organisation.For Minton, this is the top of the champagne pyramid. She describes high prices trickling down through London: billionaires displace multimillionaires, who in turn displace the millionaires who displace the rest of us. And at the bottom of the deck, people living in housing estates find themselves evicted.
When their homes are knocked down and replaced with luxury apartments, the process starts again.Throw in a planning system that has been allowed to inflate underlying land costs because it has been hobbled by MPs; the monopolisation of house building by a few big companies, which limits new supply; and Margaret Thatcher’s Right to Buy scheme, which sold off large amounts of council housing, and we’re putting together a picture of how that chicken got so expensive.Minton’s focus is on the human costs. The more housing is treated like a financial asset, the more likely it is that those without assets will lose out. It speaks to the book’s central question: who is London for? Is it for the international super-rich, the institutional investor or the ordinary working Londoner?
The only problem with framing the debate like this is that it gives us a free ride. Minton’s book, while it doggedly — and successfully — needles those behind the housing crisis, doesn’t look inward, at our own complicity. The British are obsessed with house prices. Any move by policymakers to reduce them significantly would be politically toxic.We also get little sense of the intergenerational tension. Millennials have been all but shut out of the market unless they have wealthy parents — a report last month named “the bank of mum and dad” as the unofficial ninth biggest mortgage lender in the country, funding nearly two-thirds of all property purchases for the under-35s, at least in part.That said, the merits of Big Capital are hard to ignore. It’s a studied, sustained attack on a market that has been mishandled by successive governments for 40 years, not because politicians have been unable to remedy it but because it has been expedient not to. It makes for painful — yet compelling — reading.
Big Capital: Who Is London For?, by Anna Minton, Penguin, RRP£9.99, 178 pages
Nathan Brooker writes about property for FT House & Home
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