© Stephen Collins
As a professor at the London School of Economics, one of the world’s top universities, Paul Cheshire earns well above the average Londoner’s salary. And yet his home, in Islington, has made even more.
“We’ve generated housing equity that’s more than my salary throughout my life,” says Cheshire, whose specialism is economic geography. His daughter, who attended Oxford university and is now a practising lawyer, “lives in something the size of a couple of our bedrooms. And that’s with parental help,” he adds.
In the time between Cheshire buying his home in 1996 and helping his daughter buy hers in 2010, average local prices roughly quadrupled, according to the Land Registry, and have continued to rise since. Prices have shot up as real wages have stuttered; the supply of new homes has not kept pace as demand has steadily risen and regulations governing mortgage lending have tightened, limiting access to finance. Without a leg up from parents, first-time buyers on average earnings are stuck looking up at the bottom rung of the housing ladder.
Forecasts of falling property values have given some would-be buyers hope that an era in which wages have decoupled from prices might be drawing to a close. But the higher interest rates that are a drag on prices are also pushing up mortgage rates, a scenario that tends to hit first-time buyers particularly hard. The cold reality is that life has rarely been so hard for a first-time buyer in London as it is today.
Cheshire describes this state of affairs as a “distortion” with grave consequences for the UK capital — damaging London’s competitiveness by driving talent further afield.