London has undergone gentrification for several decades, but it now faces "supergentrification", with working-class areas already annexed by middle-income earners being seized by the even bigger money of oligarchs, CEOs, arms dealers and hedge-fund managers. In the process, according to a report from the New Economics Foundation, the squeezed centre cannot hold, as districts become polarised between the super-rich and the few small reservations of social housing that have survived decanting or right to buy, and that now await a likely purge via the bedroom tax and the end of lifelong tenure.

Yet the very areas of north London where supergentrification is advancing once offered alternatives to this grim cycle. The immediate north of central London, in the boroughs of Islington and Camden, was the first in the capital to be seriously gentrified. In the 1960s, these fairly nondescript streets were partly inhabited by people working in the railway industry, and were partly in the middle of clearance and depopulation, since postwar planning legislated that London should become less rather than more populous. However, when the London boroughs were reorganised in the mid-60s, these areas became officially part of some of the richest districts in the capital – the historically affluent fringe of Hampstead and Highgate. This meant that councils could raise enough money in taxes to build council housing that was much more ambitious and expensive than the austere, often prefabricated towers dominant at the time.

But something else was happening, entirely unplanned. North London was being colonised by the "knockers-through", as Alan Bennett, one of their number, called them. They would buy up cheap, dilapidated but picturesquely "period" late Georgian/early Victorian houses, but would bash through the non-structural walls to create the sort of airy, open-plan layouts usually found in new, modernist houses. In their wake came antique shops, pseudo-antique pubs, and all the now-familiar paraphernalia of gentrification, in a visually different but basically analogous way to the effects of "hipsters" in contemporary Hackney. And as with east London today, richer incomers would follow these opportunist bohemians.

An overlooked aspect is that architects also moved to north London. There are entire streets there, such as Murray Mews in Camden, that were entirely designed by architects for their own use at the turn of the 1970s. And what is telling is that these houses were not radically different from what was being built for council tenants nearby.

Under the borough architect Sydney Cook, Camden in particular built possibly the finest working-class housing ever provided in British history – estates such as Highgate New Town, Alexandra Road and Branch Hill, all of them low-rise, sharply (but not bleakly) modernist, based around pedestrian streets, and finished to an exceptionally high standard – one which, as the financial crisis of the 70s began to hit, eventually proved to be a little too high a standard, as costs escalated. Yet the council's response was not to abandon their housing programme, but to move instead to buying up older properties, doing them up and letting them to council tenants – taking these places before the knockers-through had the chance.

The result didn't mean that north London had some sort of "positive gentrification", rather that local authorities tried to ensure that gentrification would be irrelevant, with no major effect on the mass of the area's housing, which would not be open to wealthier incomers. Instead it would be council-owned, with subsidised and controlled rents. That is what has been so conspicuously absent since – the simple, once inoffensive social democratic notion that wealth could be redistributed spatially, rather than just financially. All this was dealt a blow by right-to-buy, from which housing still hasn't recovered. Some people have made a lot of money from the resultant inflation, and their bemoaning at what they've created is of little help.

What London desperately needs is a better council housing programme, not laments over the fate of its "squeezed" middle.