[mrow84]

> Simple supply and demand dynamics are not at work here.

I think that in this case simple supply and demand is a pretty major factor. There has been consistently limited supply of new houses in the UK (policy driven, as I understand it), and at the same time there is a healthy buy-to-let market, where the buyers are both 'big' investors and relatively ordinary people (often from older generations who rode the wave of increasing house prices and so can afford second homes).

These two factors together reduce overall supply, pushing prices up further and making younger people stay renting for longer, thus reducing their available capital even more (relatively speaking).

Governments of all stripes are utterly dis-incentivised to address the issue in any comprehensive way because driving down house prices would completely screw over a large section of the voting public (i.e. almost anyone who currently has a house).

Mortgage prices are ridiculously lower than rents in this country - you could easily pay half as much in mortgage repayments as you do in rental costs for the same home, at least in the south.