Few of Britain’s problems could not be solved by putting shovels into the ground. Nowhere is that more true than when it comes to housing – a shortage that could, if left unchecked, become a brake on the entire country’s economic growth.
On our front page today we report on a potential fall in London property prices – a fall that would send house prices all the way back to where they were, err, in August 2021. In short, it’s bad news for anyone who bought in the last year, but it’s not about to make housing in the capital dramatically more affordable.
Why does that matter? The ‘global race,’ as George Osborne once put it. London is a contestant in a worldwide beauty contest alongside some of the world’s best cities – with the judges not just being investors and corporate chief execs, but talented young staff choosing the place that they think offers them the best chance to get ahead. In that modelling parade, the price of London’s housing is a sizable zit showing up at just the wrong time.
Businesses from banks to restaurants to newspapers continue to see European staff pick up their bags and head home – successful in their careers, they nonetheless struggle to see the possibility of putting down roots here. Chief amongst the reasons? The fact that the average first-time buyer needs to put down a deposit of more than £100,000.
That matters for the capital’s long-term prospects. The City’s greatest advantage over European competitors is the number of exceedingly bright people that find themselves here, swapping and improving ideas. If more of them find themselves choosing Berlin, Dublin or Edinburgh, the competitiveness of the City gradually falls – not in a reverse big bang, but in a slow drip, drip. That’s more dangerous than ever in a post-Brexit world which forces the capital – for better or worse – to be more agile and innovative than ever before.