ancient cities

462 London, United Kingdom
households and large increases in the level of earnings
and incomes for these groups. At the other end
of the spectrum, low-earning and low-income
groups have seen much smaller increases, if any, in
real incomes. This has led to a sharp increase in the
extent of earning and income inequality between
the top 10 percent to 20 percent and the rest. In this
respect, London’s experience is broadly similar to
that found in other major global cities, which have
become both more affluent and much more unequal
in income distribution over the last 20 to 30
years. There is a major difference between growing
inequality and social polarization, however.
The Housing Market
The growth of a large affluent middle class has
had a major impact on the housing market in
terms of demand and prices. As the supply of
housing is broadly fixed in the short and medium
term, the impact of increased effective demand for
housing in more attractive areas of London has
had the effect of pushing up house prices across
the board and generating major problems of housing
affordability, which have been intensified by
the large number of wealthy overseas buyers who
bought investment property in London during the
last 10 years. Average property prices in London in
2007 were in excess of 10 times average earnings.
The house price slump of 2008 to 2009 is likely to
reduce the problem of housing affordability.
The growth of the middle class has also had a
major role in propelling the process of gentrification:
a term first introduced by Ruth Glass in
1964 to describe the interaction of social class and
housing changes in inner London. Large parts of
inner London have now experienced some degree
of gentrification as the process has spread outward
from the original core areas. The gentrification
process has taken a variety of different forms,
ranging from the classic renovation of singlefamily
houses to the conversion of houses into
apartments; new build gentrification, particularly
in Docklands and along the river and canals; and
recently, loft conversions of former industrial/
warehouse buildings, offices, and public buildings
into luxury apartments. Many of these processes
have introduced a new middle-class resident population
into former working-class or run-down or
derelict areas as well as the recolonization of areas
formerly built for the middle classes in the eighteenth
or nineteenth centuries but later abandoned.
Gentrification is only one of the processes that
have transformed the housing market of London
in the last 40 years, however. In 1961, more than
60 percent of households in inner London still
rented privately, and social housing and homeownership
were both relatively small (each under
20 percent). During the 1960s and 1970s, large
areas of poor-quality private rented housing were
compulsorily acquired and demolished, and the
areas were then redeveloped as large social housing
estates, some but not all in the form of highrise
tower blocks. As this sector expanded with the
simultaneous growth of homeownership, a process
of tenure social polarization began to occur in
which social housing began to see a growing concentration
of the economically inactive, unemployed,
low-skill, and low-income workers, and
some ethnic minority groups. This process of social
residualization has persisted and intensified, and
social housing in London today, as in Britain in
general, has become linked with the less economically
successful, the deprived, the socially excluded,
and some ethnic minority groups.
This process has been intensified by the numerical
success of the Conservative “right to buy”
legislation introduced in 1980, which led to large
numbers of council housing tenants buying their
home from the council. Although this was beneficial
to the tenants concerned, it had the effect of
significantly reducing the size of the sector. In
addition, the Conservatives also cut the money
available for new construction significantly and
directed funding to the housing association sector.
As a result, the council sector has shrunk dramatically
from its high-water mark in 1981, when
it accounted for 42 percent of households in inner
London, to 25 percent in 2001. A series of other
policy measures, including the large-scale voluntary
transfers of council homes, have also effectively
forced many councils to dispose of their
holdings to other social landlords.
The 10 years from the late 1990s to 2007 have
also seen another major change in the structure of
London’s housing—the revival of renting from
private landlords. This sector had declined continuously
from the 1950s to the early 1990s,
largely as a result of rent controls and security of
tenure, which meant that many landlords sold