The FINANCIAL — From Chelsea to Hampstead to Mayfair, London’s wealthiest individuals and families feel that they are being pushed out by people with even more money, according to new research from LSE.
According to Dr Luna Glucksberg of the International Inequalities Institute at LSE, wealthy and influential individuals and families living in the most exclusive areas of London feel they are being displaced by a new group with global money.
In recent years, London’s prime real estate market has become an increasingly attractive destination to international investors – with international buyers purchasing 60% of prime property in 2014 according to international estate agent Strutt and Parker. The use of London real estate, especially in prime London, as a safe place to store capital has also been explored by a number of studies.
Dr Glucksberg said: “As a global city with a central position in global financial networks, London is utterly distinct from national and regional housing markets in terms of prices and ability to attract buyers and investors”.
Dr Glucksberg’s research, based on ethnographic methods, participant observation and interviews collected over 2.5 years (2013-2015), found that wealthy individuals and families living in London’s most exclusive postcodes feel priced out of their neighbourhoods.
This established elite group – which includes lawyers, business people, and ‘old’ money families – feel they are being outpriced by foreign buyers and are responding by either selling and moving out or buying flats for their children in surrounding areas.
Both overt and covert racism were found to be present as a result of the feeling of displacement by non-British buyers and investors.
Dr Glucksberg said: “The study shows that the wealthy individuals and families that live in London’s most exclusive areas no longer feel able to compete at the top end of the capital’s property market. Instead they feel like they are being pushed out of elite neighbourhoods.
“For the first time, this elite group are buying flats for their children in areas they never would have previously considered. Families from Chelsea are buying flats for their children south of the river because they feel they cannot afford to buy anything nearby.
“The implications of this are enormous. Locally, what this group is experiencing is a loss of control – something they are not used to – and, perhaps more importantly, a loss of community.
“The changes to these neighbourhoods are completely redefining their character and residents feel they are striping away the established local community.
“These are powerful individuals who are used to getting things their way. But if you live in a property next to one owned by an overseas buyer who rarely lives there or an international investor, there is little you can do to make them fix the gutter if they don’t wish to, even if it’s your house or flat that ends up rotting.
“Similarly, the study shows that residents feel powerless to stop the character of their neighbourhood changing. They argue that newcomers don’t care about the area or the community, and don’t send their children to the same schools. These are standard gentrification narratives but up-scaled to London’s elites”.
The research highlights the importance of monitoring displacement of elite communities from super-prime London – as wealthy individuals and families purchasing in surrounding areas pushes up house prices and creates a chain of displacement.
“Those ‘displaced’ from these elite areas of London are actually moving away with a significant profit from selling – normally in the millions. But it’s crucial we understand this displacement because it has significant implications on property prices in surrounding areas,” added Dr Glucksberg.