Why London Housing Is Insane In One Chart

A blog about business and economics.
Sept. 28 2012 10:39 AM

It's Mostly Foreigners Buying London Property These Days

1348843188932

Via Tim Fernholz and David Keohane, an awesome chart of who's buying property in London these days. Basically: foreigners.

There's a fad these days for net exports and trade surpluses, whereby somehow all nations are supposed to be virtuous and make more than they take. But looking at property markets is a reminder that this kind of thinking can get a bit confused. You could imagine a world with zero foreign investment in London real estate (maybe because of a regulatory issue) that's striking similar to our own. In a world like that all the same structures exist in London, except their owners are all British and they lease the property to foreigners. Perhaps it's even long-term leases that allow for subleasing. In that world, England is a thrifty nation with tons of domestically financed investment and surging exports of housing services. English people are able to import goods thanks to their export earnings.

Advertisement

The real world's not like that, of course. The English are, instead, importing lots of capital (foreign real estate investment) and using that to finance consumption of goods via a trade deficit. It's tempting to think of this as relating specifically to foreigners' affection for London but recall that Australia's been running a trade deficit forever. Well-governed developed democracies with relatively high population-growth rates attract persistent capital inflows, with much of it going directly or indirectly to finance the physical structures needed to accommodate their growing populations.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.

TODAY IN SLATE

Politics

Don’t Worry, Obama Isn’t Sending U.S. Troops to Fight ISIS

But the next president might. 

IOS 8 Comes Out Today. Do Not Put It on Your iPhone 4S.

Why Greenland’s “Dark Snow” Should Worry You

How Much Should You Loathe NFL Commissioner Roger Goodell?

Here are the facts.

Amazon Is Launching a Serious Run at Apple and Samsung

Television

Slim Pickings at the Network TV Bazaar

Three talented actresses in three terrible shows.

Foreigners

More Than Scottish Pride

Scotland’s referendum isn’t about nationalism. It’s about a system that failed, and a new generation looking to take a chance on itself. 

The Ungodly Horror of Having a Bug Crawl Into Your Ear and Scratch Away at Your Eardrum

We Could Fix Climate Change for Free. Now There’s Just One Thing Holding Us Back.

  News & Politics
Weigel
Sept. 17 2014 7:03 PM Once Again, a Climate Policy Hearing Descends Into Absurdity
  Business
Business Insider
Sept. 17 2014 1:36 PM Nate Silver Versus Princeton Professor: Who Has the Right Models?
  Life
Outward
Sept. 17 2014 6:53 PM LGBTQ Luminaries Honored With MacArthur “Genius” Fellowships
  Double X
The XX Factor
Sept. 17 2014 6:14 PM Today in Gender Gaps: Biking
  Slate Plus
Slate Fare
Sept. 17 2014 9:37 AM Is Slate Too Liberal?  A members-only open thread.
  Arts
Brow Beat
Sept. 17 2014 8:25 PM A New Song and Music Video From Angel Olsen, Indie’s Next Big Thing
  Technology
Future Tense
Sept. 17 2014 7:23 PM MIT Researchers Are Using Smartphones to Interact With Other Screens
  Health & Science
Jurisprudence
Sept. 17 2014 4:49 PM Schooling the Supreme Court on Rap Music Is it art or a true threat of violence?
  Sports
Sports Nut
Sept. 15 2014 9:05 PM Giving Up on Goodell How the NFL lost the trust of its most loyal reporters.