House prices surge in London neighbourhoods where people go hungry

A 15-minute walk from the £1m apartments in London’s leafy Primrose Hill neighbourhood, the local community association is handing out food parcels to about 500 residents a month.

The pandemic has pulled the fortunes of British consumers in two different directions, with those who are growing wealthy on properties increasingly living near people who can barely get enough to eat.

The borough of Camden just north of the city centre is a prime example. In the neighbourhood known for its sprawling street market, home values have surged 10% in the past year to £1.1m ($1.5m) , Acadata figures show. In the same district, 16% of adults struggle to get food at least once in a month.

“London is a city of two worlds,” said Sharon Baah, operations manager at Camden’s Castlehaven Community Association who has run the local food bank since the pandemic hit last year. “There are people who live on the doorsteps that are not making that income. The gap between the rich and poor, the haves and the have-nots, is quite significant.”

Figures from a University of Sheffield study and house price indexes show how the economic fallout from the pandemic has amplified wealth inequalities. That’s adding to the headaches both for Prime Minister Boris Johnson’s government and the Bank of England. 

London has long been a city of extremes. The average home costs over half a million pounds, but more than a third of children live below the national poverty line. Lockdowns to control the virus have prompted homeowners to seek more space and access to outdoors, boosting prices in the suburbs and beyond.

That’s driving up the cost of living in less affluent areas, adding to the pinch on those on lower incomes. Bromley in south London is another place where the average home value has surged 10% in the past year, according to Acadata. That delivered a £50,000 gain to owners, while one in 10 in the borough have gone hungry at least once a month.

“If you are wealthier, then you’re more likely to have made money during the pandemic because of rising house prices” said Jack Leslie, senior economist at the Resolution Foundation, a research group that tracks inequality. 

On the other end of the spectrum, millions of people remain unemployed or on furlough, struggling to make ends meet. That forced Johnson’s government into several U-turns during the pandemic on providing free meals to disadvantaged children during school closures — twice after a sustained campaign by the England footballer Marcus Rashford.

“It’s iniquitous for us to expect people to live on such a low amount of money when there is so much money sloshing around,” says Linda Tookey, a manager for money advice and welfare payments at the affordable housing provider VIVID.

That situation will worsen when a short-term increase in universal credit benefit payments stops at the end of September. “If you had a drop of 25% in your income, how would you manage?” Tookey said.

UK house prices are now at the least affordable level on record, with the average property costing around seven times earnings, data from the mortgage lender Nationwide show. Though affordability was worse in 2017 in London, the capital is still the most difficult region to buy, with homes costing 11 times average earnings. 

It’s part of a broader global trend. The UK is one of many countries where property costs are rocketing, fuelled by rock-bottom borrowing costs that came with years of monetary stimulus from central banks. The British Treasury fanned an already red-hot market by giving a temporary tax break on home purchases.

Two of the Bank of England’s deputy governors, Dave Ramsden and Ben Broadbent, have indicated concern, saying they’re carefully watching developments in the property market. Earlier this month, the BOE said it’s likely to pare back stimulus for the economy to keep inflation from overheating.

Britain also is “doing really badly” in terms of ensuring that nobody in the country goes hungry, said Megan Blake, a researcher at the University of Sheffield who led a project mapping food insecurity. When people are forced to make choices about what to sacrifice because of income, food tends to be the first thing to get scrimped so that electricity and rent is paid. 

“Increased housing costs are something that put a squeeze on people’s budgets,” Blake said. 

In Bromley, Sarah Shaw, 49, gathered bread for her family and a friend who has cancer at the Downham Gleaning Pantry in the Brook Lane Community Church.

“Things have been pretty hard for us,” said Shaw, who after losing her job in February 2020 is also losing her home due to eviction. “It just feels like we’re losing everything. Coming to these kinds of places, you meet a lot of people in the same situation.” The week after visiting the food bank, Shaw was turned out of the home where her youngest child was born. “It wasn’t pleasant,” she said. “All we managed to take were our clothes, three saucepans, the television from the bedroom and the toothbrushes.” The family of five have since been found a two-bedroom flat in Brixton, where Shaw is sleeping on the living room floor.

The government helped workers through the pandemic with a furlough that pays 80% of wages to those whose jobs were forced to shut. But much of those support measures are about to expire. A temporary ban on evictions has lifted, and the furlough program is due to finish in September at the same time the boost in universal credit finishes.

Since the pandemic started in early 2020, the number of people claiming universal credit has doubled to around 6-million. In a city like London, charities and local authorities are building community hubs to help support those in need.

In Hackney, Michelle Dornelly runs several food hubs, driving crates of food from one end of the east London borough to another. She said the pandemic has highlighted the number of people both without food or access to cooking equipment.  

“I just want to be prepared for the next wave,” she said from her van after dropping off food parcels for homeless people in the area. “Nobody should be looking at their child crying and thinking, ‘Oh my God, how am I going to feed you?”’

Even as the economy recovers from lockdown, organisations such as the food distribution charity the Felix Project are expanding services, expecting a widening gap between the rich and the poor will leave more people in need for years to come.

“It’s lifted the lid on just what level of need is out there,” said Rachel Ledwith, who heads community engagement for the charity that delivered 21-million meals last year — a fifth of what the charity is building up to. “We’re not seeing the drop off as the economy opens up.”

Bloomberg News. More stories like this are available on bloomberg.com