Are people living in the capital actually better off?by Torsten Bell / October 12, 2018 / Leave a comment
Published in November 2018 issue of Prospect Magazine
London calling? Earnings in the capital and beyond
London has often been a byword for wealth in provincial England—which is why we remember Dick Whittington not just for his cat but for London’s supposed “streets of gold.” But how true is this?
With so much trade and finance centred in London, property prices have always been higher, and—when so much wealth is tied up in bricks and mortar—that means there is indeed a wealth gap between London and the rest of the country.
In the average wealth figures, this spills over into the capital’s southeastern hinterland, where a somewhat older population has had more time to build up more wealth. Furthermore, over the long years in which (until very recently) house prices surged in Walthamstow while stagnating in Wolverhampton, the regional gap tended to widen.
Compared to the period just before the financial crisis (2006-8), typical household wealth in London is up by 62 per cent in real terms, compared to a rise of just 10 per cent across Great Britain. This matters. Much of the worldwide increase in wealth—and the danger of it being concentrated in fewer hands which Thomas Piketty worries about—is due to the rocketing value of scarce land in globally connected cities.
None of this means the streets are paved with gold for all Londoners, any more than for Dick Whittington. High average wealth in the capital hides spectacular inequality. Aspiring home-owners, for instance, are missing out. As recently as 2…