Global urbanisation and the focus by people on city-living has meant that international investment activity has also been focused in this way. Worldwide, prime city property has appreciated in value but mainstream property has not grown by so much. This is as true of London as any other global city.

The impact of overseas investment by private individuals in world cities seems to have pushed up prices for wealthy people in the prime markets, but not so much for mainstream property in secondary markets.

London’s prime residential real estate is seven times more expensive than its mainstream housing, compared to New York’s, for example, which is only four times the price. The higher incidence of overseas property buyers in London has created an international market in prime property but London’s mainstream property is about the same price as New York’s.

At a global level, mainstream London property prices are on a par with Singapore and New York and cheaper than Hong Kong’s (all of these cities have growing populations and constrained land supply). This still makes London one of the most expensive locations in which to buy property globally, but the issue seems to be one of high demand against near-static supply, rather than the weight of money pressing on prime markets.

^{Source: Savills World Research}

It is when new development is overly concentrated in prime markets that these supply problems are exacerbated. London has been able to grow the size of its prime stock but has been less successful at growing its mainstream housing supply. London has several possible solutions to its issues of high home prices:

■ Densify and make better use of land, especially in central and transport-accessible neighbourhoods

■ Open up new areas with new transport infrastructure

■ Regenerate low-grade and low-density land, both publicly and privately owned

■ Intensify neighbourhoods by mixing residential into low-intensity retail and workspace uses

■ Expand beyond political boundaries, a significant proportion of London’s workforce lives outside Greater London already.

Until most or all of these solutions start to change the supply of housing in London, the city is likely to remain among the world’s most expensive.

^{Source: Land Registry, Savills Research}