Undercover Economist

London’s turning . . . 

‘London’s excruciating price tag is not just a vulnerability but also a sign of success’

What is happening to London? Is the city devouring itself, its street life disappearing as flat-pack apartment blocks metastasise in once-healthy neighbourhoods? Or are we simply witnessing a process of regeneration and renewal? Rohan Silva, a former adviser to David Cameron, recently told architecture magazine Dezeen that London might lose its creative class because of high rents. In The Observer, Rowan Moore wrote that London “was suffering a form of entropy whereby anything distinctive is converted into property value”.

It is natural that journalists find this an urgent topic: surely the gap between the price of a typical London house and the salary of a typical London journalist has never been higher. But the topic is genuinely puzzling, because London’s excruciating price tag is not just a vulnerability but also a sign of success. It is hard to see how the city can be written off when so many people are willing to pay such extraordinary sums to live there.

It’s worth dismissing some disaster scenarios. Many people fret that the infamous apartments of One Hyde Park stand for the future of London: joyless, unaffordable and empty most of the time. But London is not going to become a gigantic holiday park full of second homes for billionaires — there simply aren’t enough billionaires out there to turn a city of more than eight million souls into the equivalent of a weekend hideaway in Cornwall.

Another concern is that international investors will snap up new-build apartments as investments, then leave them empty. But rental property is a much better investment when one actually rents it out, so this makes sense only if one accepts that most international investors are insane.

Nor has London abandoned its social housing sector either — not yet. About a quarter of London’s households live in social rented housing, and many more than that in inner London. The prevalence of social housing has been falling since the 1980s — but slowly. Social housing is still on offer to almost a million households.

The vision of London as a ghost town can be disproved in an instant by the experience of actually being in London. Try to get on the Tube at Clapham Common at 8am, then tell me that London’s problem is underpopulation.

“London’s population is going up,” says Professor Christine Whitehead of the London School of Economics. “And there’s no indication that the new population is the wrong mix.”

“Mix” is an important word here. More than 50 years ago, in The Death and Life of Great American Cities, Jane Jacobs emphasised the merits of variety in city life. If a neighbourhood had a mix of homes, offices, factories, shops and nightlife, then the streets would be interesting, well used and, therefore, safe for many hours a day. More rigorous zoning might look tidy on a city map but would leave streets (and shops) unusably overcrowded at some times and deadly boring at others. Tedious and perhaps dangerous, such a neighbourhood would be fragile. Jacobs also advocated a mix of different industries so that ideas could spread from one to another. Her most famous example was Ida Rosenthal’s invention of the bra after working not in lingerie but in dressmaking.

Fundamental to all this, wrote Jacobs, was a mix of old and new buildings. Leaving aside unusual cases such as Venice, cities need a mix of higher-rent buildings and more decrepit low-rent buildings, because such buildings house different kinds of activity. Experimental projects, in particular, need somewhere cheap — the Silicon Valley garage, perhaps, or the east London warehouse. “Old ideas can sometimes use new buildings,” Jacobs wrote. “New ideas must use old buildings.”

This is London’s challenge: if only hedge-fund millionaires can afford to live there, then even the hedge-fund millionaires will not wish to. Artists, start-up hopefuls and hipster baristas need not only low-rent places to live but low-rent places to work. If London loses such places, then it will indeed lose its creative edge.

Still, London does not yet seem to be short of hipster baristas. Whitehead says: “I’ve heard that argument once a decade for the past 50 years.” It may yet come true — but so far, so good.

The trouble with creative destruction is that it is always easier to see what is being lost than what is being gained. Notting Hill seems pretty dull to me these days but Clapton Pond is on fine form: brothels have been replaced by bars; murderous dives have been replaced by gastropubs; fried-chicken joints have been replaced by coffee shops. The mix is changing but it’s still a mix, and it’s not obvious that the new mix is disastrous.

What would be disastrous would be if the lot were bulldozed to make way for apartment blocks in which nobody wanted to live because there was nothing to do outside. We must guard against the encroachment of such residential deserts, yet they remain rare in London. The city is, of course, a playground for the super-rich. But, for now, it remains much more than that.

Written for and first published at ft.com.