This report show that there is a new driver of inequality in London: the rapid increase in house prices.
Over the past 20 years the price of housing in London has quadrupled. The housing crisis is now the top issue for London voters, worried about the price of homes, and London businesses, who worry about their ability to recruit in an area with such high living costs.
Housing and Inequality in London shows that there is a third reason to worry about high house prices: the effect this is having on income and wealth inequality in the capital.
The report reveals three ways in which the crisis is changing the face of poverty and inequality in the capital.
- Rising housing costs are eating away at discretionary income and undermining living standards. This has had the biggest impact on private renters who are least sheltered from increases in housing costs, with the result that the traditional association of poverty with social renting no longer holds.
- Increased cost (or value) of housing has increased wealth disparities. Those who are already on the housing ladder have seen the value of their asset increase markedly, while everyone else is finding it harder to get on the housing ladder in the first place.
- The housing crisis has affected spatial inequality. Inner London has historically had higher poverty rates than outer London, but rapidly rising house prices in the city centre mean that it is increasingly unaffordable for lower-income people. Meanwhile a movement of lower-skilled, lower-income workers into outer London has also increased poverty rates there. The housing crisis is therefore turning London’s poverty map inside out.
This report builds on the findings of Inside Out, which looked at how poverty and wealth in inner and outer boroughs have changed since 2001.