Cheerio, London

Image source: Marti Bug Catcher, mikeledray - Shutterstock

What's going on?

The streets of London have got emptier, with renters fleeing the uber-expensive city at a record pace.

What does this mean?

You know something’s wrong with the rental market when people start making houses out of dumpsters – but with the average London renter paying 9.1% more last month than in January 2022, that move almost seems sensible. That said, a more practical and popular option is simply upping sticks, with over 90,000 rental households leaving the city last year – the biggest exodus in over ten years. And it seems those ex-Londoners made the right call, with the average rent in the capital now at a wallet-thinning £2,141 ($2,588) a month – more than double the national average. That’s a steep asking price, especially when nearly 10% of private tenants are already falling behind on housing costs across the wider country.

Why should I care?

Zooming in: Ghost town.
More than three quarters of the tenants who fled the capital kept their jobs, which means that it’s a tale of two cities these days: you’ve got the real Londoners who still live in the city, plus the pseudo-urbanites who work London-based jobs from laptops further afield. Thing is, you can’t eat and drink over Google Meets – so with fewer people swilling and snacking after the office, the city’s economy is poised to take a hit. It’s a similar story across the pond: it’s estimated Manhattan workers alone are spending $12.4 billion less each year now that they’re in the office less.

The bigger picture: Dominoes.
This trend isn’t about to fix itself. After all, when white-collar workers cut back on spending, it doesn’t just mean there’s less need for employees to offer them products and services: it also means that local tax revenues take a hit. And when that happens, there’s less money to fund public services like sanitation and education – which could make the situation snowball.

Originally posted as part of the Finimize daily email.

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