[Emma_Goldman]

I think it would be very wrong to think of increasing house prices as a direct reflection of intrinsic value.

In the UK the economic model of the past forty years has been based on a conscious policy of asset price inflation. Thatcher stripped away most of the social housing in this country and put it into the market. Few have been built since. The recentering of the economy in financial services has led to a massive expansion of easy credit, that reaches its fulcrum in the housing market. Together this has meant: (a) a dwindling housing stock; (b) progressively larger sums of credit chasing the same number of properties.

That is not to mention the fact the since the late 1960s London has been the main global waystation for offshore tax havens, much of which is attached to property sales in the capital. There are 100,000 properties in the UK which are held as investments, unoccupied.

[TheOtherHobbes]

There are actually two economies - one where everything is an investment to be sweated for returns, and one where everything is priced according to real world utility.

In a financialised system everything is priced according to the values of the first economy, which are completely divorced from conventional economic utility.

This makes everything unaffordable to those who don't have access to that economy. It also lowers the quality of goods and services within the second economy, because providing quality and value conflicts with fast high returns.

[zimablue]

Great post, worth noting that the marketing of the destruction of social housing as "right to buy" was a work of evil genius, and the citizens who know the most about it are people whose parents made a killing from it and are unsurprisingly very happy with the policy.

Catchment areas for schools are also a significant factor, mandatory ballots for school entry would make a massive difference but our government has been going in precisely the opposite direction, privatising the education system and leading to an expulsion crisis which is having knock on effects in crime.

Also London specifically is one of the lowest density major capital cities, the centre is often old and beautiful but we could stand to build a bit higher.