Houses are getting more and more expensive in the UK.
Expensive houses in London are getting more expensive at a fast rate
Expensive houses in inner London are getting more expensive at an even faster rate.
The gap between the cost of the more expensive houses and averagely priced houses is getting bigger and bigger in London, while it is quite stable in other parts of the country.
Similarly, the gap between how much an average home costs and how much a cheaper home costs is getting bigger and bigger in London, but not in other regions.
What’s going on here? It’s partly a matter of not enough homes being built. If there were more homes being built in London then house prices would not go up so quickly.
However, is there something else at work here? Larry Summers has argued that the rich countries are experiencing ‘secular stagnation‘. Economies with low interest rates and low growth rates don’t offer investors many places to put there money. It’s perhaps to be expected that in these circumstances rich people from around the world invest their money in property in inner London.