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Samuel Johnson used to think that ‘there is in London all that life can afford’. That might still be true – except that now not everyone can afford to live where they want to in London.
London’s housing crisis is a well-versed phenomenon, and some of its grisly details will surprise absolutely no one. But these symptoms are a result of long term demographic trends, with long term demographic implications – many of which emerged from our report Urban Demographics: Why people live where they do, which was published last week.
One of the report’s key findings was that there has been a return to city centre living in cities right across England and Wales in the last 20 years. The reasons behind this trend go right back to the Second World War, and were strongly felt in London. The Blitz decimated central London’s population, and the anti-urban mentality of the following decades was cemented in the post-war years through the introduction of the green belt, a ban on central office development, and the building of New Towns, which drove Londoners out into the suburbs and hinterlands. From 1991, this started to reverse dramatically (see Figure 1). Cities right across England and Wales grew between 1991 and 2001, but London grew substantially – an additional 77,000 people lived in the capital in 2001.
Figure 1: City centre populations of cities in England and Wales, 1971-2011
Source: Casweb (2015), Census 1971, 1981 and 1991 data (enumeration district level), Nomis (2015), Census 2001 and 2011 data (LSOA level). Note: The break in the series appears because data from 1991 includes students in their term time address, while data for 1971 and 1981 does not. This means that data for 1971 and 1981 is likely to underestimate city centre populations.
But while other large cities saw population growth accelerate from 2001 onwards, in central London it slowed down. Growing numbers of jobs in London (which have also centralised over recent years) have increased demand to live there. But house prices in central London are now 1.69 times higher than in the suburbs, thanks to a very limited supply of housing. Between 2001 and 2011, there were 7,200 newly built flats sold in central Manchester. Central London – a considerably bigger area with much higher demand – saw just 6,900 being sold.
So the people who do live in central London are the ones who can afford it. This means that central London is much older than city centres elsewhere in the country: 22 per cent of central London residents are over 35 with a degree, as opposed to 8 per cent in the centres of large cities.
And it means that demand has instead spilled over into the suburbs and beyond. Between 2001 and 2011, London’s suburbs grew twice as fast as the suburbs of large cities. Spatial constraints in central London has meant that the majority of recent house-building has happened in suburbs, and so the young professionals who in other cities are more likely to live in city centres are instead found further out in London (see Figure 2).
Source: Nomis (2015), 2011 Census.
And because people’s priorities and residential location choices are so strongly driven by the particular stage of life they are in, it means that London’s suburban residents choose to live where they do for very different reasons than in other cities. Typically, suburban residents – who are likely to be married and have children – tend to live where they do because of the cost, size and type of housing, and to be close to good schools. But across London, suburban residents are more likely to be young, highly qualified, and to be employed in professional occupations. In short, they’re a lot more like city centre residents – and that means that they want city centre amenities. They’d rather live close to restaurants, leisure and cultural facilities, and close to their workplace. But to access those things, what they really need is good public transport – and so this is by a long way the most important factor driving residential decisions right across London (see Figure 3).
Figure 3: The main reasons why Londoners chose to live in their neighbourhood
So what are the future implications of this? If London cannot build new homes to meet its growing demand, then house prices will rise, population growth will dwindle, and businesses will start finding it difficult to fill vacancies.
And if London does build significant numbers of new homes, the vast majority are likely to be in its suburbs – but those who will live there will want to be well-connected to central London and the rest of the capital. This means that transport links have to be at the heart of any expansion plans for London.
Conveniently, there’s a ready-made solution to this. London’s green belt offers a ready opportunity for strategic additions to the capital’s housing stock, on land that’s not expensive to develop, and much of which is already well-connected. As our report on Building homes where we need them found, there is space for 1.2 million new homes in London’s suburbs, if just 60 per cent of the suitable green belt land within 2km of a railway or underground station is developed at suburban densities (Figure 4). Releasing this land strategically will allow for sustainable housing, with good intra-city transport links, that will allow young and highly qualified people to live more affordably in London, and to support its long-term economic growth.
Figure 4: Opportunities for new homes in London
Source: Census 2011, location of usual residence and place of work, downloaded from NOMIS in July 2014. Census 2011, Number of Dwellings, Lower Layer Super Output Area (LSOAs) Downloaded from NOMIS in September 2014 and All Usual Residents data. Homes and Communities Agency 2009, National Land Use Database of Previously Developed Land (NLUD-PDL) in England. DCLG (2007), Green Belt geographical extents provided by English Local Authorities. Contains Ordinance Survey data © Crown Copyright and database right 2014.
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