The point of this piece is not that living in Barcelona and commuting to London is sensible -- it's that the North London property market has gone totally batshit insane.
No, seriously: renting a 2 bedroom flat in a not brilliant suburb of London costs around £25,000 a year, or US $40,000. Then you can add council tax (another £2000), water, electricity, and gas bills, and travel. Upshot: the fixed costs of living in London are on the order of US $50,000 per year (two beds) or around $40,000 per year (one bed). Note that I focus on the two bed option because that's the practical minimum for a family unit, or for someone who telecommutes from home. Note also that the average gross income in London is a little under £28,000 per year (before tax).
Upshot: normal people and normal families can't afford to rent in London any more. The only thing propping up these insane prices is the scarcity induced by the current bubble in the foreign investment housing market. The crash, when it comes, is going to be epic.
In fairness, comparing the property prices in a fashionable London district with those in a lower income country in deep economic trouble after its property bubble burst (and Ryanair's loss-leader headline fares) isn't the best illustration of how expensive London is.
I mean, you can match those Barcelona prices in nice market towns a short train ride from central London (probably a similar door to door time to many parts of central London to commuting from West Hampstead), which many London workers actually do. They can think about buying in those areas from £75k as well.
But the investment bubble at the high end of the property market is a largely separate phenomenon; middle-class renters are more likely to take advantage of cheap rents from a lazy letting agent managing the investment property of a foreign owner who's not too savvy about what their buy-to-let income should be than they are to be affected by the unoccupied flats in Belgravia not being on the market. For that reason, for £28000 a year I got five large bedrooms, two reception rooms and a garden in a desirable south London suburb three years ago, so I'd expect a pretty impressive[ly located] 2 bed flat for £25000....
> with those in a lower income country in deep economic trouble
Things might be a bit more subtle than that; Barcelona is in catalunya, which is actually doing quite well for itself in spite of the catastrophe in the balance of Spain.
The region of Catalonia has a budget deficit that runs above Spain's average and is also the region with the largest debt outstanding, twice as large as the region behind. From reading the FT, Catalonia is in big trouble, and they had to introduce a tax that taxes bank deposits i.e. double taxing your income. I don't think they are in a very good shape.
I think that's a bit of a stretch, Catalunya is by itself in a huge problems (debt) and is also still a part of Spain, so you can't that simply separate it from the problems of the country.
It's true that Barcelona by itself is probably still doing pretty fine - but I would say that's for different reasons - there's no shortage of people from all over the world coming there to live/work/study, be it Erasmus students or business people (a lot of Germans my experience is telling). That keeps the renting market busy.
On the other hand, 680€ for a three-bed flat in Les Corts? That's insanely cheap, so either the OP found a great opportunity or the prices really dropped down in a last year (or, third possibility: I overvalue the attractiveness of Les Corts)
Of course imagine if Spain still had it's own currency. It would be in the tank making the cost differential significantly more dramatic. Thus attracting more people and more real estate purchases helping to re-start the economy etc.
£25k/yr is ~£480/wk - student accommodation at Imperial College (this is South Kensington) goes up to ~£250/wk for a living room and bedroom.
Taking a cursory look at the (current) prices in the area, Chelsea and similar areas look like you might find a single place or perhaps two at those prices, but it won't be terribly appealing - attempting to actually rent for £480/wk looks like it gets you a studio/1bed flat.
Edit: So essentially, £25k/yr will get you almost nothing in upscale areas, a hell of a lot in downscale areas.
Using Chelsea as a reference point for London prices is akin to using Rolls Royce as a reference point for car prices. Yes, you have to pay more to show off if the BMW isn't upscale enough for you.
There's plenty of choice of central locations with good housing, transport, reputations and nightlife where £25k per annum gets you a very nice flat indeed.
OTOH it is also somewhat fair to say that trying to stay close to upscale areas whilst not being in them can in quite some number of cases place you in slightly risky areas to live.
Isn't there a thing in London about people subletting every part of their property to bus loads of migrant workers?
3 bedroom place then becomes a 6 rent unit property off the books. That would explain part of the rocketing prices. I've known chinese nationals who stayed 15 to a london property. All cash. Authorities do nothing and some are in on the shuffle taking kickbacks.
>> 2. How does overfilling properties lead to rising prices? If anything, it would serve to keep prices lower.
When one family rents a 2 bedroom flat, they may be able to afford say 1K (husband and wife working). But when the same flat is rented to 4 singles, they might be able to afford 2000. Each person's share is just 500. So when the landlord asks them 1200, they would happily pay for it as the effective rent per person is only 300.
What you are saying is that the primary driver of price is ability to pay. This is basically a claim that the market isn't competitive at all. That's a fairly strong thing to say, as even a vastly under-supplied market can be competitive.
"Willingness to pay" is different from "ability to pay" -- your willingness to pay will be greatly affected by the price of competitors or neighboring markets, for example.
Right, if there's no competitors or neighbouring markets, then you have a monopoly situation, and the sole seller (or cartel) are free to set prices as high as people are able to pay. But just because there is a shortage doesn't mean there's a monopoly.
This overfilling is pretty widespread across most nationalities just getting by in London, if you go by anecdotal evidence.
A friend of mine lives somewhere in North London (I believe it is Golders Green), paying 1300pounds a month for 2 and half room apartment, paying council tax and so on, all on a minimum wage as a porter which is around 1200 pounds a month(why he prefers being a porter over a Perl programmer that is one of his skills is another question).
If he were not subletting the room and half, there would be no way he would be able to work in London for a minimum wage. The situation is similar to most people working for minimum wage that he knows.
Still, I think this overfilling is a symptom not the cause of high property prices. This overfilling by the poor has always happened in big cities.
Yup, that is the whole point of market economies, they self correct eventually. I totally sympathize with the folks in London it sucks not being able to find an apartment, so you end up either in a horrible commute or working elsewhere. That makes it harder to find people to work there, so if the imbalance persist the jobs move elsewhere, and the revenues go down, and the economy cools off.
So if you're in your 20's today, something to think about is how this might self correct. Either telecommuting could take off, or something like Musk's Hyperloop dropping off people from one urban center into another. Ask yourself what is it about London (other than the job) that makes it a desirable place to live. Can those things be replicated outside of London? Can you build an urban 'night life' center and split the night life from the work life? What is it going to do to the cost of businesses that have to be in London? Can those businesses be made more efficient or profitable by enabling them to minimize their local footprint? On and on. It really isn't sustainable, and as Charlie points out the crash is going to be pretty epic. So think about how you might turn that to your advantage in 10 years.
Musk's hyperloop might or might not be workable in the right place, but it's simply not going to work in London. (Cost of new construction: prohibitive. Also, London's transport infrastructure is groaning at the seams -- it dates to the 19th century or earlier (road layout mostly dates to the 1670s) and it's simply overloaded. Hyperloop seems to be a high-speed low-numbers solution; what London needs is relatively low-speed but extremely high volume transport.
When it happens I think it'll look like an explosion in semi-telecomute jobs. All those people who spend weekdays away from their families at the moment will find they really only need to be in town for 1 or 2 days per week, and companies will realise that this is a great way of opening up the talent pool while keeping wages low.
So, building lots of co-working spaces in England's market towns and regional cities seems like a sensible move right now.
“companies will realise that this is a great way of opening up the talent pool while keeping wages low.”
It's certainly cheaper to move bits than bodies, so why don't companies realize this already? Why do they keep placing more jobs in places people can't afford to live?
One cynical suggestion is that the people making these decisions do live there, and their inflated property values depend on keeping demand high. But this explanation is obviously false because it would be a violation of fiduciary duty.
Naturally :%s/London/Silicon Valley/g among others.
It's certainly cheaper to move bits than bodies, so why don't companies realize this already?
It is the whole 'working at home' issue which not all companies can deal with. Whether it is employees who take advantage of not being visible or managers to fret over what they aren't able to see, it challenges them to be as productive as if they were all in the same room. There is also a certain energy "boost" from having everyone together for whatever reason.
On alternative might be something like the dedicated co-working spaces with high bandwidth connectivity. Imagine that you're "office" is a just a mile or two away, has perhaps 8 or 12 offices/cubes/spaces and is set up so that it is connected at 10gbit to the main 'campus. When you are there you are "virtually present" in other working spaces around the country connected similarly. Large projection screens providing views of the other spaces with real time teleconferencing type audio links with spatialized volume management. The result is you are "near" your home in the lower cost area, everyone at "work" sees and can hear the other folks at work, and rather than paying to heat/cool/lease a multi-floor space in downtown you are paying for a bunch of dedicated 10G point to point lines between many smaller, more efficient spaces.
> The point of this piece is not that living in Barcelona and commuting to London is sensible -- it's that the North London property market has gone totally batshit insane.
That's not the only point.
The other point is that flights are still much too cheap:
And that is because airline companies/consumers are still allowed to externalize the insane environmental costs. Meaning: we are allowed to pollute, without having to pay for it. That means, a) we promote pollution (the externalized costs) and b) these costs are paid for by the entire world population (1st, 2nd and 3rd world, even if the latter have never ever polluted in the slightest way).
Or you could rent in Croydon, a suburb with below average crime (for London), a population earning above the London average, and pay more like 11,000 per year for a 2 bed flat, within 15 minutes on the train from London Victoria and (EDIT: I left out the rest of the sentence) <20 minutes from London Bridge.
25k/year here will give you an upscale serviced short-let apartment, or a 5 bedroom, 3 reception room house with a large garden.
In other words, the prices you give are based on assumptions about living in a really expensive part of London.
... is something pretty much only people who haven't actually spent time living in the nicer parts of Croydon says, and presumably a large part of the reason why it's so cheap.
(and for the record, the prices I cited are for some of the nicer parts of Croydon - in the (few) shit holes you'd pay much less)
Frankly, I'm not moving anywhere else in London again. If I ever strike it rich, I'll still stay here, because what you get for your money here is insane compared to elsewhere in London.
Up to and including huge mansions off private roads (Croydon is home to one of the wealthiest areas in the UK, in parts of Purley) of a size and with gardens that require "staff", that go for less than what many people pay for tiny flats in Central London.
If it's worth thousands a year to avoid having a Croydon post code, I have no sympathy.
Croydon isn't fashionable, I get that. So you need to be happy paying a premium for a fashionable brand. That's all this piece is about, places where there is very high demand and a limited supply are very very expensive.
I have my own 2 bedroom flat in a professional neighbourhood, no through road, so it's pretty much a private community. Paying under £700 a month on a standard variable rate mortgage (I could push it even lower switching mortgage providers).
Looking out my living room window I see trees. In winter, I have views of Caterham valley. It's quiet and peaceful. This morning just the rustle of leaves and my clock ticking away. I'm surrounded by green, rarely hear traffic, a rumble of a train every now and again down the East Grinstead line. It's everything that London is not.
So it's part of Croydon, zone 6. A choice of two train lines, decent access to London. The 40 minute commute each way is good for hacking away at a personal project, laying down foundations for next steps, bolstering/improving unit-test coverage.
Granted, front-door-to-front-door, it costs me 11 hours to do an 8 hour day, but the time outside of that is all mine, in an environment conducive to lots of thinking and reflection, and coding zones.
And earning less than colleagues doing the same role, I have a lot more disposable income as a single tech-guy working in London.
Snub Croydon if you want, but you also chose to justify market prices of North London rent. That's why London has a series of commuter belts running parallel to the train lines. There's a tradeoff of cost, time and quality of life to be made.
I quite like the southern parts of Croydon: South Croydon, Purley, Kenley, Warlingham, Caterham. Croydon has good parts and bad, both can change over time, as people living there slowly change. I'm in a once-family area that's mostly professional couples now. On the commuter belt into London.
> Looking out my living room window I see trees. In winter, I have views of Caterham valley. It's quiet and peaceful. This morning just the rustle of leaves and my clock ticking away. I'm surrounded by green, rarely hear traffic, a rumble of a train every now and again down the East Grinstead line. It's everything that London is not.
This right here is the reason I'm moving from Brixton (short tube commute) to Caterham/Warlingham/Whyteleafe next year (longer commute, better quality of life, cheaper rent).
Croydon is really improving and there's actually a pretty cool surging tech scene there. As they have a lot of fibre, cheap commercial property, support from council and transport links. Not that I'm saying people should work in Croydon just yet as there aren't enough tech companies but there are quite a few medium sized ones and some startups.
+1 for living in Croydon. It's cheap, there's excellent transport links to the centre and it's easy to get out of the city and find some countryside.
Also to add to @brackin's comment, the Croydon tech scene has been gaining momentum for a few years and is at a really exciting stage. There's a real opportunity for Croydon to rival Shoreditch as a UK centre of technology.
This sort of attitude (which is general and by no means limited to you ;-)) is part of why living costs in London are so high. A lot of people in London, even the relatively poor, are so psychologically locked to living there that living anywhere else simply isn't an option they'll entertain.
Or down in Canada Waters or Rotherhide. I had a nice place down there on the water and a great commute by ferry. There are a bunch of nice areas if you steer clear if what is trendy.
I know a number of colleagues (I work for a large global corp) who have moved to Spain from the UK for many of these reasons. We heavily embrace remote working through the use of online meetings and video-conferencing. If you need a high quality meeting, they go to the office for 52"+ HD telepresence. They regularly fly into London because it is not cost prohibitive to do so - even on their own budget. And their salary in Spain? Good. Not quite as good as London, but good.
I also know people who work in this style from Newcastle and Manchester - though the train tickets are often more expensive than flying, there is the added benefit of power, space, and being able to arrive ~5 mins before your train departs.
EDIT: Currently attempting the same from 1hr outside of Paddington, where my rent is less than 50% of my London rent. Though it's certainly a lot more dull than living in Zone 2!! I wouldn't advise it :-(
I don't think there will be an epic crash in London any time soon, if ever. There is no excess supply, no overbuilding. It's completely unlike the Spanish or Irish property market in that regard.
London property prices will decline if and when London loses its role as an important financial center. Maybe if the UK leaves the EU, Singapore's gravitational pull increases, or some important regulatory changes take place.
I'm not sure that a decline in the financial industry would have that effect.
I don't think such a decline would have any effect on the supply side; it won't suddenly create more houses, or release more houses from ownership to rental.
What effect would it have on the demand side? Well, people in the financial industry who could move to Singapore or Zurich or whatever might well do that, and so stop wanting to rent houses. But there are vanishingly few such people - you're talking about the elite. Their loss (if we call it a loss) wouldn't have much impact on demand. The kinds of stupendous penthouses and townhouses they rent mean they're not even competing in the same market as the normal middle-class mugs. The majority of people in the financial industry - from bank apparatchiks down to post-room clerks - aren't about to up sticks and migrate to a tax haven. If their jobs go away, they will be looking for other jobs in London.
Even if they decide to give up and go and become shepherds in the Dales or something, how many of them are there? Finance is big in London, but it's far from being a dominant employer. There are huge numbers of people working in all the other sectors of a post-industrial economy too - law, media, IT, corporate head offices of all sorts, academia, healthcare, culture, not to mention all those civil service jobs. If we accept the (forecast) 2013 numbers in http://www.london.gov.uk/sites/default/files/wp51.pdf then finance employs 357 000 people, out of a total of 4 859 000 - 7.3%. Significant, but not enough that anything short of a collapse of the industry will have a significant effect.
I think you grossly underestimate the importance of the financial sector for London's economy. I've been watching the IT jobs market there for a long time. My estimate is that at least half of all IT jobs are directly or indirectly related to finance. I'm sure it's even more extreme in legal and some professional services.
Property prices do not simply depend on the number of people looking to buy. They are also determined by how much people are willing and able to pay. If you strip out the inflated salaries they pay in finance, it's going to trickle down to all other salaries and prices.
The financial sector employs large numbers of foreigners. If they leave, demand gets crushed. Also, let's not forget that London property isn't just bought to live in. It's also an investment for rich people from all around the world. If finance moves on, these investors will follow suit.
It'd be useful to get some hard numbers on how many jobs in the other industries are dependent on finance. And, conversely, how many jobs in finance are sustained by the other industries, rather than simply being part of the edifice of international capital. FWIW, my estimate would be that less than half of tech jobs in London are in finance, but without hard numbers, we're just making things up, really.
I'm not sure about trickle-down effects. These highly-paid finance people are not competing for the two-bedroom flats in Seven Sisters that i and other more ordinary middle-class people are after, are they? They're looking rather further upmarket. So, their demand drives a high prices of nice flats in Greenwich or townhouses in Chelsea or whatever. If that demand goes away, prices of those will fall. Then, some people who are currently looking at flats in Seven Sisters may switch to looking at these cheaper houses in Chelsea (choosing a barely affordable place somewhere nice, rather than a cheap place somewhere not so nice). That will reduce demand in Seven Sisters, and should let prices fall. But the degree of fall isn't related to the prices that the finance people were paying in Chelsea, it's just a function of the number of people who shift their attention out of Seven Sisters. I would expect the effect on prices in Seven Sisters to be muted. As opposed to, say, a collapse in the publishing industry, or the government getting serious about moving the civil service to the frozen Northern wastes, which would directly reduce demand in the middle of the market.
The point about international investors doesn't make any sense to me. People don't invest in the London property market because this is where the financial industry is, they invest because it's a safe investment with a good return. The only connection to the financial industry is indirectly, via demand. And since my belief is that a substantial decline in the financial industry would not reduce demand very much, i also believe that such a decline would not cause a flight of investors.
It's not just London, it's everywhere. Every successful first-world major city has this crazy housing price thing happening. Toronto is the same, as is Vancouver, and I'm sure Americans can list more than a few towns with freakish condo markets.
Berlin is still extremely cheap. You can get fairly large 1BRs in nice, central areas neat Mitte for 400-500 EUR or even less. Larger apartments are not much more expensive. You can still find a largeish 2BR below 1000 EUR.
Madrid, Buenos Aires, Seoul, Osaka, Barcelona, and Mexico City all seem to have quality cheap central options, too. Tokyo and London seem to have affordable desirable safe quality outlying areas not too far from the center on the train.
The really terrible situation with no viable alternatives seems limited to SF and NY. (Maybe Paris? News about Paris always makes the cheap suburbs seem dangerous and non-French.)
London trains are hardly affordable. A 30 min commute into London on the train would add £300/month to the cost for where I live. Or 500/mo if you want to park at the station.
I have a three bedroom place (wich I share with two others) in New Jersey for $1600 and its only a $6 35 min commute to New York. Not bad if you ask me
It depends what you class as cheap. I work in Barcelona, and my rent is affordable, but if you compare the IT wages here and in London, I regularly get contacted about jobs paying around double what I earn over in London. I have been looking around for new jobs, but it seems I am already pretty close to the top of the salary range here.
I don't know. It's clearly first-world. And it's a major city -- the political center of Germany, one of the top tourist destinations in the world, and highly regarded for its arts and culture, nightlife and high standards of living. It's got low unemployment and high growth. It's also host to an apparently booming startup culture (although many of the actors with presence in the city are in fact foreign companies).
I don't know anything about modern-day Germany, except the constant buzz in the news of the German economic success. Is Berlin overshadowed by other cities in Germany? Is it merely the seat of government and not economically successful?
Or is this merely a German joke about a rough town?
Germany's industrial power is concentrated in the central and southern parts of ex-West Germany. Berlin just doesn't manufacture enough cars. :P
(Now I'm wondering if this is like the PRC, where Beijing has the rich history of a capital but bland areas like Shenzhen are where the money is made.)
The jokes about Berlin would be mostly about its horrendously mismanaged prestige project - the new airport.
As of when? I've helped three people relocate here over the past three month, as well as hunted around for my own apartment, and we've found nothing in that price range in Mitte.
Yeah, and Prenzlauer Berg is actually quite gentrified (staying there for the second time now). It's full of middle-class professional families with children.
Right. Add on places such as Moscow, Sydney, Zurich, Singapore, Tokyo, Hong Kong - and you have some of the worlds most expensive cities (when converted to USD, not considering the relative costs of living).
Even with the relative costs of living taken into account, some cities are more expensive that others - London & Sydney are still right up there.
Don't forget Auckland, housing market is insane here and the residents are destroying the city through single dwelling zoning all the good, close to the cbd land.
It's simple supply and demand. Lots of people want to live in the popular districts of big popular cities, but the supply is strictly limited (you can't simply build a ton of extra houses in an old neighbourhood in a city center), so prices go through the roof.
You don't have to live there. You can commute. And if it gets too hard to find good people in London because both the rent and the commute are terrible, companies will eventually open offices in more fertile areas.
It was outrageously easy to get credit, which let to the prices going up, and then the crash. Now the answer to the problem seems to be more of the same.
I've been researching Toronto for the past few weeks. Rents seem cheap compared to condo prices. I can consistently find 1 beds for 1500 and two for 1800-2000. As a reference, I paid 2K for a studio in Manhattan and thought I was lucky.
Yes the London market is a bit nuts, but if you're paying anything close to 25k/year (that's 480/week!) for a 2 bed in a "not great" part of London then either you have very high standards or you're being seriously ripped off.
I live in a relatively nice bit of South London. My rent is £1250/mo. It takes me 15 minutes to cycle to work in the centre (the Tube is 30 minutes by virtue of the nearest station being 15 minutes away, but closer to the stations is still the same rent). North London rent is insane.
One or two bedroom apartment? It's still a pretty crazy rent from what I've seen of (advertised) London salaries (it's almost as expensive as here in Bergen, Norway -- but here you almost have to make an effort to make less than £32 247/year if you work full time).
London is expensive, and West Hampstead is one of the more expensive areas in Zone 2.
However, there is much better value to be if you move out a bit. I rent a 3 bed double story semi-detached house in zone 5 NW London in an awesome residential area. Its located in a cul-de-sac, we have a proper front and back garden, no 1950's council flats anywhere nearby, near a great high street and lots of green spaces around. Rent is £1350 per month.
Oh, and there is a fast train (no stops) to Euston which takes only 12 minutes.
just to note I did a mental exercise on this recently: affordable home is supposedly 2.5 times yearly income (if you earn 50k do not buy a home worth more than 125k).
the upshot of this is for the average income in London (28k) the affordability limit is 70k. And there were last month 66 properties advertised for sale in London at 70k or less - for a city of 8milllion
That's a bit misleading, the cheapest 2 bed flat for say nw6 is £13k a year from a quick search and the cheapest in London is probably around 10k, things are overpriced and finding quality housing in a nice area is hard (as it is in most large cities), but there is a broad range of properties available, and rental costs vary from £200 a week or less to over £7,000 a week for 2 beds in different areas just a few miles apart.
Even ignoring north of 96th street (which, check a map, is part of Manhattan) there are plenty of neighborhoods where you can find a two bedroom for $3k or less. Yorkville, Chinatown, far LES, parts of alphabet city, the far west 30s, and probably others I'm not familiar with.
That you could say such a thing says more about you than the rental market.
No subsidy. Most of my non-wall street friends pay in the $600-800 range as well. Among this subset, the farthest one to the south is on 106th, and the farthest one north is on 160th. I'm 1/2 a block from the nearest A/C/E station and about 4 streets/a 5 minute walk from the 1.
Yes, per bedroom per month. It's more like $1800-2400 for a 3br though, because those appear to be the most cost-efficient. Off the top of my head, I remember visiting one place that was a 2br for $900/person (including utilities) around 140th which I liked, as it was quite spacious, but it was a bit out of my price range. IMO, if I had $1100/month or so I could have found a place in a great 2br pretty easily though. Quality seems to vastly improve with each additional $200/month.
Makes sense. Isn't this part of London part of the Grosvenor Estate? No wonder it is expensive- I believe they keep the freehold and only give 100 year leases.
Right, and if you want to live in a "leafy green" part of zones 4, 5 and 6, with good transport into central London expect to pay close to zone 2 prices (e.g. Richmond, Wimbledon, even Beckenham, etc.). A 2 bed in Richmond will set you back £1400/month +. And that's a slightly amazing 40min commute (via Waterloo).
Only if you are really selective about wanting to live in the expensive leafy green areas. There are plenty of "leafy green" parts of Croydon, for example, where prices for a 2 bed is more in the 800-1000/month range.
1400/month will give you a large house with a garden many places here.
Heck, if I could get 1400/month to rent out my 3 bedroom house with a garden, I'd have enough left after paying my mortgage to rent a 2 bed flat nearby (though that admittedly is because I struck it lucky with a very favorable tracker mortgage).
As a Brit living in Silicon Valley, I look at these numbers and think that perhaps I should move back to London. I'd certainly save a lot of money on rent. (But, of course, the income scales are very different!)
I love these comments about a bubble in one of the most coveted cities in the world when interest rates have been at their lowest ever. What is causing this bubble that prices would decline so much that they would match Barcelona, a great city but not one desired by people all over the world in the center of the financial capital of Europe.
Rent control? Geez. If it's the destruction of the city you're after, you could just bomb it, you know. :P
(Oh! Or are you one of those denialists who thinks rent control isn't actually destructive, and prefers your own vision of reality to what the consensus among economists has to say about the matter? because if so I've got some people you should meet who don't believe climate scientists on global warming, or the medical establishment about things like homeopathy, and i think you can all be friends)
I know!! Have you tried to get an apartment there recently? I swear, there'll be something like 50 couples standing in line to view a rickety, old, drafty, minuscule 1-bedroom, at a price that they can barely afford even if they are working for Google. It's INSANE.
Yeah, rent control is bad for Googlers trying to move in to SF, especially on short notice. But it's good for locals who already live there, who are not standing in line for flats, because they already live in them. How you weigh ease of moving in vs. stability for long-time tenants is more of a public-policy than economics question initially, and depends on how you assign utility (though economic analysis can help you maximize utility, once you've assigned it). A pure unrestricted market is already making an ideological decision that stability of people's current living situations should be valued as having zero utility, which not everyone agrees with. If you assign some kind of non-zero-but-not-infinite utility to that, then it's likely neither an unrestricted market nor a classic rigid rent control system will be utility-maximizing, and instead various hybrid schemes may be preferable.
One scheme used in some European cities is to let the prices float freely, but kick in a subsidy for existing residents when rent in an area increases by more than a certain % of their salary, softening the impact of market shifts on neighborhood turnover. This of course has the impact of increasing prices for newcomers relative to a situation where such a subsidy didn't exist, because fewer existing residents will be forced out due to rent increases, thereby freeing up fewer empty apartments for newcomers to rent. But that's the goal of the program, to reduce the number of existing residents unwillingly forced out of their neighborhood by rent increases, by shifting the margins a bit. With some kind of actual quantitative assignment of utilities it'd be possible to rationally design a subsidy program that buffers the impact of large changes without neutralizing them or setting up a long-term two-tier market (for example, subsidies can cover less than 100% of increases, and phase out over time).
Well yeah, but in places like SF and NYC, supply is limited by available space. We could house people in 6x6 cubes in giant rectangular buildings to be really efficient, but nobody wants that. So what do you do when your supply is limited, and the poor and middle class are being pushed out of your city?
Cupertino already is fairly high-density, at least downtown. And I don't think anyone suggested bulldozing anything, just allowing people to build what they want, which they currently have a very hard time doing.
How does Swedish rent control work? Because in San Francisco it only applies while the same person is living there. So old tenants keep their "original rent" with small inflation linked increases, while new tenants pay the much higher "market price".
So in the same apartment building you have a new tenant paying $3000 and an old tenant paying $400 for same size apartments. I.e. the new tenant is overpaying to subsidize the old tenant who is underpaying.
I'm not sure, but I think it is more of a "regulated market/fixed price w/index adjustments based on inflation". So a price will have been set at some point in the past, and is adjusted up a few percent every year, depending on inflation (typically less than 2% I think for Sweden).
To be clear, there is a "black market" of sorts wrt apartments in Sweden -- not sure how that works, but I think it is people illegally sub-letting at a higher price and/or owners taking a "bribe" on top of the regulated rent -- and it can be hard to get apartments in certain areas (high demand, too few new buildings) -- but my impression is that on the whole, it works much better than an unregulated marked, like the one we have in Norway.
I mean, the point of the article is a little shocking, but it carefully doesn't mention the commute time, which appears to be the thick end of 7-8 hours per day (2h 30 flight each way, and Stansted is not exactly in the heart of London).
As a result, there's no shortage of people paying London's high rent prices. I'm one of them, and I wouldn't trade cheaper rents for that kind of commute (or, honestly, even commuting for 1-1.5 hours from the many towns outside London where such a thing is practical). So why does London need rent control?
Not the only thing. The other major factor is housing benefit, in which a landlord can charge well over the odds, and the govt just pays it. They are trying to cap it, to howls of outrage but from whom? Not the tenants, they never see the money. But from well-heeled buy-to-let landlords whose cash-cow is about to be slaughtered. That's why papers like the Graun oppose it - that's their readers!
I think you're making a correlation/causation error here. Housing benefit has crept up over the years because the property market was inflating steadily and no government dared bring it back down (middle-class home owners vote to punish governments who hit them in the wallet). Housing benefit rises stuck a plaster on the chest wound by allowing low-income workers (bus drivers, shop assistants, nurses) to live in places where they were needed but could no longer afford to rent or buy.
Considering that housing benefit was set for a long time at the median market rate, this surely drove rental prices upward.
If landlords know they are guaranteed the median by way of housing benefit, they set their rents at the median (given a housing shortage, they can guarantee to rent out any old dump at the housing benefit rate with no disadvantage: and this is evidenced pretty well by distribution of rent prices), which has driven the median upward - a vicious circle of rent increases.
Really? I would have thought the group of people taking this rather capitalist route would not be reading a left leaning newspaper like The Guardian.
For example its obvious you don't, otherwise you would realise The Guardian has been banging on about the cost of London for donkey's years (at least 20) and against the bubbles of buy to let. I remember lots of stories flogging against it as the journalists were complaining they couldn't afford to live in London.
Their also complaining against the current schemes the UK Government which Gideon is pushing regarding mortgage guarantees and everybody (whether in the UK or not, whether working in banking or not) is saying will just create another bubble along the lines of buy to let.
Well, left and right is pretty meaningless these days. That's why the Graun is owned by a holding company offshore in the Caymans where it pays no tax. Your typical reader of it was a "proper" left-winger once, back when they were a student, but now they are well-off, highly paid jobs in law, the media and the civil service, and they'd like to stay that way thankyouverymuch. When they say they care about cause X, they really mean, bung my PR agency a million quid to raise awareness of this, oh and hire my mates as spin doctors, ifyouwouldn'tmind.
The Guardian is owned by Guardian Media Group plc, which is a UK public limited company headquartered in London. GMG plc is owned by The Scott Trust Ltd., another UK public limited company. So far as I can tell, it is not true that the Guardian is owned by a holding company offshore in the Caymans, nor that the Guardian is owned by a company that pays no tax. (Except that GMG has made a loss in many recent years and therefore paid no corporation tax. So far as I can tell, these are genuine losses and it seems reasonable not to pay corporation tax if you are not making a profit.)
It does appear that in 2008 the Guardian Media Group bought a magazine company called Emap, and set up a company in the Caymans as part of some (allegedly quite standard) scheme to avoid some of the stamp duty they'd otherwise have paid in the acquisition. Maybe that's dodgy or maybe it's just standard operating procedure (in which case something is dodgy but it might not be in any useful sense GMG's fault), but it's a very different matter from what you claimed.
I am in any case unable to follow your logic at one key point. Let's suppose for the sake of argument that the Guardian is owned by a tax-avoiding holding company. What exactly is the connection between that and the statement that "left and right is pretty meaningless these days"?
(Full disclosure: I read newspapers seldom but the Guardian less seldom than others. I do not work in law, the media, or the civil service, I do not have a PR agency or any mates who are spin doctors, and I would hazard a guess that my pay is within a factor of two of yours one way or the other. So far as I know, I have no financial or professional interest in the success of the Guardian or its allied companies.)
GMG is selling a product. They (the owners, editors, writers) no more believe it than at McDonald's corporate HQ they live on cheeseburgers for every meal.
> GMG is selling a product. They (the owners, editors, writers) no more believe it than at McDonald's corporate HQ they live on cheeseburgers for every meal.
You know The Guardian is unlike other newspapers and runs at a loss.
"Miller admits that he does not foresee the newspaper earning a profit anytime soon. Rusbridger said, “The aim is to have sustainable losses.” Miller defines that as getting “our losses down to the low teens in three to five years.” But at some point, if the Guardian does not begin to make money, the trust’s liquid assets, currently £254 million, would be depleted."
"... owned by The Scott Trust, a charitable foundation existing between 1936 and 2008, which aimed to ensure the paper's editorial independence in perpetuity, maintaining its financial health to ensure it did not become vulnerable to take overs by for-profit media groups. At the beginning of October 2008, the Scott Trusts assets were transferred to a new limited company, The Scott Trust Limited, with the intention being that the original trust would be wound up.[93] Dame Liz Forgan, chair of the Scott Trust, reassured staff that the purposes of the new company remained as under the previous arrangements.
The Guardian has been consistently loss-making.
...
The Guardian's ownership by the Scott Trust is probably a factor in its being the only British national daily to conduct (since 2003) an annual social, ethical and environmental audit in which it examines, under the scrutiny of an independent external auditor, its own behaviour as a company.[95] It is also the only British daily national newspaper to employ an internal ombudsman (called the "readers' editor") to handle complaints and corrections."
And Nike, Reebok et al are about sports, but they still make clothes for people with 60" waists to laze around in eating pizza. McDonalds sells salads in their restaurants too, but they ain't a healthfood company.
You've been bamboozled by the Graun's PR and branding, which they should be slick at, that's their main demographic.
That page says that the Guardian's owner owns a company in the Cayman Islands. It doesn't say that the Guardian's owner is registered in the Cayman Islands, nor that the Guardian's owner pays no tax.
In other words, that page says exactly what I already said, and does not say what you said.
> They [...] no more believe it than [...]
It's far from clear exactly what "it" means (presumably something like "the opinions printed in the Guardian", but those are far from monolithic) -- but I would be interested to know your evidence that the people writing for the Guardian do not believe what they are writing.
And, also just out of curiosity, are there any left-leaning publications that you think are sincere, or is it your opinion that everyone whose politics you dislike is a hypocrite?
I like to get a balanced view of the news, for left-leaning stuff I like the NY Times and for right-leaning, I like The Times. The Graun is the counterpart to the Daily Mail, both of them are for dingbats.
If this was such a massive cash cow, it should still be driving property sales prices through the roof, and banks should be lining up to find ways to shift their loan books towards the buy to let market.
The real issue is a lack of properties in the places people want to live.
The idea that housing benefit is driving the rental market is total nonsense. a) it forms a minority of the market and b) the majority of landlords won't let to people on housing benefit.
a) There are ~850k housing benefit claimants in Greater London[1], out of a total population of just under 5mm.[2] That's ~17%. Not a majority, to be sure, but also not small enough to discount entirely.
b) Just because some landlords do not want to deal with non-claimant tenants doesn't mean that non-claimant tenants will only want to rent from such landlords, if it means cutting themselves off from lower rents. Theoretically removing those 850k people from the housing market would undoubtedly make the prices fall, if only for a while.
Interesting. This is more than I'd have thought but you can't just remove them from the supply/demand picture and say they are driving prices up by their very existence. The OP's point I was addressing was that housing benefits being paid were above market rates (not true as they are capped) and this was pushing the whole market.
You know there's something called a local housing allowance, which sets maximum rates for housing benefit, right? And that's been in place for years? There are rules about ages and size of accommodation.
There are strict rules about over-accommodation too. The bedroom tax has been operating for many years for everyone except those in council houses and housing association properties.
There are a number of different approaches to addressing the extra risk this will introduce to rents, with things like Jam-Jar accounts, but it's generally expected to introduce more insecurity and thus limit the amount that can be spent on new housing.
> Universal Credit will cause tenants to be paid their housing benefit directly.
Housing benefit gets paid directly to the tenants. Many years ago you could ask for it to go direct to the landlord, but organised gangs set up claims in the names of dead people.
The gov is looking at changing how housing benefit is paid, from directly to the landlord to directly to the tenants, they've been running the pilot schemes for it quite recently in fact. You can find loads of reports on the things with a quick search, some from quite reputable sources.
I suppose it's possible you and I are talking about different kinds of tenancy, but I don't think that the numerous news stories on this can just be hand-waved away either.
> The point of the piece is that the author is a cheapskate(nothing wrong with that) and they would rather save the extra 387 quid/week.
No - the author does not suggest that he plans to carry this out: note that he uses only hypothetical averages. He only points out that it is theoretically possible, which is outrageous enough in itself.
I object to the idea that people in general have the simple option to "work harder" to make up 387 difference. In truth, that amount is enough to legally employ 1.5 people.
Poor people (up to and beyond median earners) are excluded from options that you describe as investments precisely because they are investments - if you need to spend your labour and capital on survival, you can't afford to "spend it in smart ways".
What? The author never actually said they were going to do this, it was just to make the point of how expensive London is, which is what the parent comment said.
I rented a loft for 6620€/year. It's mint condition and it's in the outskirts of Barcelona. I'm 12 min in subway to the plaza Catalonia and in 7 min using the train or 20 mins in bus. To be honest, I would never never again will rent in the centre of the city. It's expensive and all buildings are antique, without the proper commodities.
If you want to come Barcelona, check the outskirts, get a scooter or enjoy the Barcelona transportation system. It's wonderful.
I want to add some more info about living in Barcelona.
The weather is magnifique. It barely rains all the year. You can go mountains withing 2h car travel if you want to enjoy the snow in winter.
Eating can be really cheap IF you go to the supermarket, buy all the meals and cook yourself like I do, I saved 300€/month doing this instead eating outside. If you can compile rails, you can be a chef, :). I do buy the meals and stuff for around 90€/month. That includes the 40lts of water i buy. Then daily i try to buy meat, fish or vegetables for the week and it cost me no more than 220€ month.
I pay 90 euros electricity, 30 gas and 40 water every 2 months. 60 euros for 100mbit fiber connection + phone and mobile and that's all.
Most tech startups work in English, specially the ones with international/remote workers. Besides that, the "working language" is Catalan, because Barcelona is a city in Catalunya.
Language isn't a problem, as long as you speak English. Outside work, you'll hear both Catalan and Spanish. Both are easy to learn and understand, and people do really make an effort to understand and be understood, so no problem there either.
Barcelona is a different city. Most of the europeans come to Barcelona because we're used to speak english, if you compare to other cities where people barely speaks spanish well. Barcelona is multicultural to a high level.
At my job we all speak english. And sometimes we speak mix english / spanish but its rare.
Sounds a lot like San Francisco (though I guess "wonderful" isn't the word some people would use to describe mass transit, but I think it's pretty great compared to the one I have now in the American midwest)
It is not like SFO at all. The weather, the food, the culture, the beaches (you can swim without freezing it), the mountains and the history makes Barcelona a really different city. No offense to SFOers.
I have to concur on the weather part. San Francisco in summer is like Barcelona in the worst day of winter. Please do not equate sunshine and nice weather. No offense to SFOers, your city is lovely nonetheless.
Indeed, in terms of environment, Barcelona is like San Francisco, except without the fog or Asian food. Unfortunately, it doesn't quite have the same employment opportunities either.
About 5 years ago I did this. I flew from the south of Spain (flying from Jerez on RyanAir) to London once a week for 2 days a week (couch surfing with a friend).
Its a hard lifestyle - by about the 10th of these flights you will be sick of the security hassles (and RyanAir) - but it was way better than living in London full time (no offense).
I did it for 18 months before finally burning out on it and moving to a full time remote position (which paid less but I decided that that was worth the upgrade in lifestyle).
UK renting is just idiotic at present all over, although especially bonkers in our capital city.
Remember that 1 bed flats are especially in demand at present as a result of the (in)famous bedroom tax[1]. A single person or a couple are only allowed 1 bedroom if they need to claim housing benefit (unemployed or low-wage, and remember that in London 'low waged' is a pretty high threshold, e.g. teachers, social workers, retail staff, bus drivers &c).
Bear in mind that building 1 bedroom flats has (hitherto) been regarded as a waste of money for housing associations or councils, so that really only commercial lets are available (at usually twice or three times the rent of a HA/council flat with 2 beds), so, ironically, the tax payer will be paying more to move couples out of 2 bed high rise flats in rough areas which are hard to let into expensive private let 1 bed flats. There will be no takers for the high rise flats (unsuitable for children) so they will be mothballed then expensively demolished.
Yes, bonkers, but the UK is run by the Daily Fail and other populist idiots.
Not the downvoter, but I think s/UK/London/. I agree with everything on what you say about London, but outside of London the rest of the UK isn't really that bad. You can rent a 3 bedroom house for £300/month in Yorkshire. Even if you are the only earner in a household, on minimum wage, you'll still have over £500/month left after rent (probably more if you have kids due to benefits).
"You can rent a 3 bedroom house for £300/month in Yorkshire."
Leeds? York? I suspect not.
Bear in mind that single bedroom flats are mainly built in areas where land is expensive, because it is only then that the small space saving over a 2 bed flat outweighs the similar building cost.
Birmingham: 3 bed house commercial, way outside city, is £750 pcm. That will increase when H2S happens (if it does).
This is in Bramley / Pudsey, 4 miles out from Leeds city centre (well within the Leeds / Bradford urban area). I imagine you could get similar in Armley or Holbeck (1.5 miles out).
I think s/South-East England/London. For values of 'East' which include Oxford, Winchester, and other such towns which offer cosmopolitan amenities and either a strong middle-class labour market (hello, Cambridge) or a plausible commute into London.
As other commenters have commented (in other comments), there are plenty of bits of the UK which are still cheap. And whilst they may be absolutely lovely, they're cheap because they're miles from anywhere that anyone with any money would want to work or go shopping.
That's a roughly 4 hour commute in each direction: 1h flight, 1h train ride from airport to liverpool street + commute to the airport and waiting. And this are, in my experience, conservative numbers.
So you spend 128 hours per month commuting, to save 387€. Not what I would call a bargain.
Oh, what about double taxation? I'm pretty sure you'd be hit by that and that would most likely put you well in the negative.
Most European countries have a double taxation agreement between each other. It seems like UK and Spain have one as well (at least according to the example on http://www.hmrc.gov.uk/international/dta-intro.htm ).
The argument in the post is flawed because of the commuting time issue you mention, add to that the fact the Ryanair is extremely unreliable as an airline...
Well then I would confidently say that's stupid, unless they are using their commute time to work on something or catch up on their favorite shows.
Your most limited resource is time. Money is a distant second. And if those people arent monetizing their commute or taking care of their entertainment, they are wasting time to save some money. It's nearly as stupid as fracking - wasting water to get oil, only to later have a water shortage and a raped environment. And half as stupid as wasting your health for money, then trying to get it back with money.
It's not stupid. High salaried people in NYC often locate their families in the suburbs in CT and NJ, which are safer and more livable. The commute is just a function of where they determine the salary/lifestyle tradeoff is even. Some people just place a higher utility on their family's lifestyle than their own time.
If you're a developer and doing that, you're probably doing it wrong. That's 3 hours of your life you could've spent doing whatever. Even looking at cats is better than sitting(if you're lucky to get a seat) in a train for 3 hours.
I'm just going to throw this out there, but no matter how shitty the seating is. I am at my peak productivity on planes. I don't quite understand it, but it seems to be true for me.
So that said, this would probably increase my own personal productivity.
Considering the Barcelona winter weather I'd be tempted, if I got a job in London. And I hate commuting. (A reason I'm not that hot on getting a London job anyway, despite loving the city.)
I've moved 7 months ago, and the weather has been truly lovely. I'll see how to fall/winter will be. But really, coming from Slovenia where we have hot summers, I didn't miss a thing :)
Cheaper, but fairly ridiculous. Stay in Barcelona and telecommute.
Similarly, it would be cheaper for me to rent in Mexico City and commute to my job in Los Angeles. Yes, some global metropolises have lower rents than others.
> it would be cheaper for me to rent in Mexico City and commute to my job in Los Angeles.
Is this serious? Because that's the whole point of this blog post: flying everyday between London and Barcelona it's actually doable, for real. As in: some people might end up doing it.
I work in Orange County, not far from the airport (and even closer a few years ago) I did the napkin math on commuting from Arizona every day at one point, and it definitely worked out. I would've saved money doing that.
Of course that presumes that my sanity has no value, but I'm not certain how much worse it would have been than some people's driving commutes.
I don't find 2-3 hour commutes all that unusual, though just an anecdote, in PA I knew families which would commute via car to NYC 3 hours in traffic. On the commute if there's room to work, 3-4 hours could represent a decent chunk of thinking/coding/email time.
I'm still convinced that we're just a few years away from a time when people don't have to commute to an office just to sit at a computer. That company in London could save some money and so could the employee in Barcelona if telecommuting were an option.
I think a lot of geeks have a vision of a perfect world when a detailed, unambiguous spec arrives in their email, they write the code and upload it, then the money is transferred to their accounts. There is a fundamental flaw with this concept, which is writing a spec that good is more work that just writing the code yourself. And the guy who writes that spec will need to collaborate with others enough that having everyone in the one place to do that makes sense. Videoconferencing works if you want to discuss something with which you are both familiar with someone you already know, and this admittedly is a large part of many people's jobs. But for everything else, you really do need to be there.
I'm sure there a jobs in this industry where a constant physical presence is needed. But many of us are professionally employed and notice that we go into an office every day and then communicate entirely over the computer. Given that situation, it makes sense to conclude your job would me more efficient if you simply telecommuted (provided you wanted to).
The rewards of telecommuting become even more pronounced for those of us who live in expensive cities and are forced to either spend exorbitant amounts of money to live near the office or else waste a lot of our lives commuting in traffic.
I used to think that too, but as I have gotten older I have realized that I'm absorbing huge amounts of non-verbal data just from the ambience. People put in a email what they want the record to show, but what they actually want from you is something more subtle. A 2-minute chat in the corridor can convey far more information sometimes than a whole day exchanging email.
Telecommuting doesn't mean that you have to be alone. You could go to a shared work space that is closer to home, or to a coffee shop, or the mall, or a park.
As someone who spent years working out of coffee shops nearly every day, I can say it is definitely not equivalent to the level of engagement and concentration provided by a proper workspace.
Oh, you can get a lot done there. But it's no office or home office. And the home office is monotonous and lonely.
I think videoconferencing sucks because the tech is so primitive. In 10 years we'll have proper videoconferences which are using augmented reality and have sufficient quality to replace physical meetings 90% of the time.
Of course, even conference calls suffer from the use of low-quality software and hardware. For some reason companies tend to use $1 microphone and $5 speakers for conference calls.
At one job, we had a full, no-expense-spared, telepresence suite. For formal meetings or presentations it was acceptable, but you still had to think about it a bit (e.g. pay special attention to whose turn it was to speak next, compensate for the body language or lack thereof, etc). For just hanging out, which is how most collaborative thinking work actually happens, it was useless, even with the best shared whiteboards money could buy. If you had 10 hours to work on a problem, you'd get far more done if you spent half of them traveling and actually stood in a room with everyone around a real whiteboard.
I could have made the exact same statement 10 years ago though. And where are we? (I think we're in a place where we realize it's really difficult to replace face-to-face.)
The irony is that this is positioned as something that devs want to happen and businesses oppose. The reality is that the large companies want to offshore work as much as possible. This would be extremely bad news for developers in first world countries, if it weren't for the fact that they only have jobs because it works so badly in practise.
So you believe the job of an engineer is "just to sit at a computer"?
The job is to write code, which could be done from anywhere (home, coffee shop, on the train, at the beach). The other stuff like collaboration, meetings, architectural discussions, etc., could be done virtually or scheduled for, say once a week. The benefit of a few hallway discussions is far outweighed by the 10+ hours per week spent commuting to the office.
There is a HUGE number of engineer positions where the job isn't just "to write code". If that's all you're contributing then you're in for a very limited career.
Having worked in both I realise recently. You can stick to the corporate world. Get told to use Java, Oracle, etc. Get well paid. Have decent career prospects. "Just write code".
Or my current position which is to develop the in house database, in the language if my choosing. Get to experiment with new technologies. Design it all myself (so no one to blame if it goes badly).
I would be better paid in the first job, but its way less interesting.
Eh, this is kind of what I was getting at. This view is insanely simplistic. Outside of writing code I feel like people make contributions to the product in discussions, train their more junior peers, interview prospective new team members, do a code review for someone else, etc. The job is not to just write code. This is my point. If you see it that way, you're looking at it the wrong way.
In my impression, all valuable contributions made by an engineer can be expressed by a set of commits to a set of files. I do not believe for a second that contributions that cannot expressed in that way would actually be valuable. Can you give us one example?
Your impression or your experience working with/as software engineers?
Here's what i did last week excluding bureaucracy and writing code. Talking to people to get requirements. Mentoring junior engineers. Discussing solutions with colleagues, code reviews, spec writing, spec review.
The spec writing is expressed as commits to files (we use a wiki) and some of the rest could be expressed as commits to something but bandwidth would be lowered converting it to text
I think a lot of companies will push back against this. A lot of service companies don't really make anything but provide a kind of social network based around offices. If you eliminate the offices the company looses power and could be dis-intermediated.
Your boss may not understand what exactly you do, but he can surely see you come in, sit at your desk, and see you leave at the end of the day. How is someone who cannot program his way out of a paper bag otherwise going to manage things?
In New York City -- if I recall correctly -- the non-discrimination laws don't apply if you have a small owner-occupied building (less than six units, I think), or if you have shared living spaces (like a shared kitchen or bathroom). While it might not be fair in the grand scheme of things, it's somewhat understandable, since the vast majority of these buildings are essentially houses with a spare room or two that the owner rents out.
I assume other cities and countries have similar exceptions in their laws.
I've seen tons of Craigslist ads for roommates that say "females only".
The irritating thing is that they usually say it at the bottom of the advert instead of in the title, so you waste time clicking on the link and reading it.
I'm curious, what's the reasoning? This seems really really strange to me. My experience has been that female roommates have done the least amount of damage to any apartment I've shared.
There isn't a single house or flat (for any price whatsoever) within 4 hour by train radius from Liverpool St that compares to a three bedroom in Barcelona.
Well sure, the selection of tapas in England is rather limited, it's colder and rains more, the local football teams aren't as good and you have to speak English all the time because Catalan and Spanish aren't very widely understood. But if you can't beat Barcelona for living, you'd probably want to work there too. You can definitely get similar space for your money to the Barcelona flat highlighted in the blog post in a perfectly adequate dormitory town a short commute from Liverpool Street, if Southeast England is more your thing.
I'm not convinced that house prices area actually a big deal, except as an indicator that more housing should be permitted (by zoning laws).
There are two arguments that are typically given.
Firstly, you want to encourage people of different incomes to live together. I don't believe that this is a worthy goal. It's not clear that the benefit to people on low incomes outweighs the loss to their high income neighbors. And the richest 1% always find ways to isolate themselves anyway.
The second argument is that welfare should taken into account the cost of living. I also believe this within reason, but the welfare system already does this in many ways. In fact, London's "one bedroom rule" is a clunky way to do precisely this: it lets people live where they like, but prevents people from purchasing an excessive "quantity" of housing.
Or you could live in Birmingham, in a £650/month one-bedroom apartment 10 minutes away from New Street station, where you can take a 70 minute train to London Euston.
Sure, Birmingham is not Barcelona or London, but I'm not sure how you'd enjoy them by living most of your off-work time in a Ryanair flight.
I like this article as a thought experiment, but I think in practicality, it would probably be miserable to fly to-and-fro 4 days a week.
The main cost that was ommitted that would give us an idea whether the commute is worth it is the opportunity cost (http://en.wikipedia.org/wiki/Opportunity_cost). While it'd be difficult to estimate how much the author's time is worth, if we assume that he/she gets paid an hourly wage of W, and it takes H hours to commute to and from London, then the opportunity cost would be something like W x H. If that opportunity cost is greater than the 387€ in savings, then it would not be cheaper to commute from an economist's perspective.
I just moved to North-West London Two weeks ago and can confirm these numbers. It's an interesting write-up and I can see that it's been written for the mathematical demonstration rather than the practicality but it does give food for thought.
I left Barcelona in 2007 to come to London and although the cost of living is higher here ( I live in West Hampstead ), salaries and opportunities are also much better.
Granted, I spend more money per month in fixed costs than my entire salary in Barcelona, but I still save more than I spend.
Also, from this article it seems that rents have actually fallen, because in 2007 I could not find that kind of accomodation for that price and I was strugling to save any money compared to now.
I guess the housing market collapse in Spain has actually impacted the crazy Barcelona prices of mid 2007.
I moved in 2008, and the rents have gradually been going down. Usually involves a bit of negotiation with the landlord, as legally they are allowed to raise it in line with inflation each year. Or moving out, which is a hassle, and ends up costing. So fine if you are moving anyway, but otherwise it depends.
I decided that I was willing to pay a premium for my <25 minute commute to work (close to Tottenham Court Road). And as long as other people think the same, rent will go up. Pretty standard supply and demand. Everyone works in the center, and nobody likes to waste 2 hours of their day hopping trains and buses.
So this is what you get, take it or leave it, I guess...
It's not the point of the article, but 4 hours wouldn't be that bad per se. I would hate to be on an airport every day and being with ryan air every day (I rather pay a lot more than fly ryan air personally; I am almost 2 meters in length and quite bulky in width due to food and daily gym; ryan air is cruel punishment, no matter the cost), but when I still worked in an office in the Netherlands (granted, that's over 10 years ago), I would spend 2.5-3 hours at least in traffic jams. At least in a plane you can read a book or do some work. Sitting in a car, usually in the rain/cold, foot on the break ready to move yet another 30 cm I might even consider worse than ryan air...
so 1500 GBP is about 2420 USD
1 bedroom in the good part of SF, USA cost about 2500/month.
Sure, there's no council tax and utilities are cheaper. Still, its pretty close.
I bet Paris ain't so far from that either, and let's not talk about NYC.
Basically, all of the large tech cities prices are "batshit insane".
The only hope I see, barred 1h30/2H by plane travel time, as the author suggests.. is remote work whenever possible.
You can then live 3-4h away from big cities (so you can still get together if needed), and prices are slashed by 10.
How exactly does one qualify x as cheaper than y when the comparison requires y to omit a massive economic component: the opportunity cost or value of one's time?
Additionally, why propose such an intrinsically inefficient model? What about using a hostel on M, Tu, W, and only fly in M AM and out Th PM? Monthly commute ~28 hours, quality of living benefits, and probably save even more $.
Can someone from the EU comment on the potential tax benefits of an international live/work arrangement?
It is well established that prices RyanAir advertises are not prices passengers pay.
Given the option of the hassle and commute, people would prefer to just live in London. Which is the whole point- real estate pricing is efficient in this case.
> It is well established that prices RyanAir advertises are not prices passengers pay.
Not true. An EU regulation in force since 2008 makes that illegal [1]. Ryanair, for all its other faults, abides by the law.
[1] Article 23, Regulation No 1008/2008. PDF: http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2...
"The final price to be paid shall at all times be indicated and shall include the applicable air fare or air rate as well as all applicable taxes, and charges, surcharges and fees which are unavoidable and foreseeable at the time of publication."
People sure seem to hate a lot about Ryanair. I also flew with them regularly back to the UK when I was living in Ireland. I tried a few other airlines (FlyBe, Air France, BA and Aer Lingus) but found Ryanair to be the easiest and most reliable.
Just wanted to add that the apartment that the article refers to is located in a really nice place of Barcelona. Definitely not the center, but relatively close to FC Barcelona stadium, and close to the rich part of the city.
It might at least get you a HON circle membership if you take Star Alliance flights but daily use of Ryan Air can't be beneficial for your mental stability.
No, seriously: renting a 2 bedroom flat in a not brilliant suburb of London costs around £25,000 a year, or US $40,000. Then you can add council tax (another £2000), water, electricity, and gas bills, and travel. Upshot: the fixed costs of living in London are on the order of US $50,000 per year (two beds) or around $40,000 per year (one bed). Note that I focus on the two bed option because that's the practical minimum for a family unit, or for someone who telecommutes from home. Note also that the average gross income in London is a little under £28,000 per year (before tax).
Upshot: normal people and normal families can't afford to rent in London any more. The only thing propping up these insane prices is the scarcity induced by the current bubble in the foreign investment housing market. The crash, when it comes, is going to be epic.