Why is London property so expensive?

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Can anyone explain to me why London property is so disproportionately expensive to the rest of the UK, even surrounding areas in the south east?

I can't get my head around why a tiny London flat with no garden would cost the same as a decent sized house in some safe leafy areas of the commuter belt where access to London is pretty good.

I know the pros of London - culture, services etc, but from relatives of mine who live there I know the housing conditions for people who aren't mega rich are comparatively poor, and crime is high. I have just been for a visit and even central areas looked dirty and sirens were blaring constantly.

I'm not a London hater, I love visiting and used to live there for 15 years, but I can't understand why the property prices are so so high.

It's just market forces. Supply and demand.

That and landlords and foreign investors, who buy up loads of real estate as an investment, then let it rot.

To much demand, not enough supply.

That's it in very simplistic terms. I think.

Demand, convenience of being in the big city? It's not just London, any capital/big city is way more expensive than suburbs, I think.

In the commuter belt, access to London is good, but a season ticket could still cost £6000 per year ( just for the train - so add station parking onto that) for the joy of standing up for 30 minutes crammed into a tiny space surrounded by other people's armpits.

Good transport, lots of jobs.

Supply and demand - if lots of people want to live somewhere then property sells quickly and prices rise. If an area isn’t popular then property takes longer to sell and prices fall.
London has the largest UK job market and the highest population. Also there are lots of international buyers who invest in the London property market.

Demand is high.

I live in outer London...the Elizabeth line and HS2 has meant house prices are through the roof due to Chinese investors. One area was classed as deprived the same people still live there doing the same jobs to new landlords along with hundreds of empty flats owned by investors

Supply and demand: the most basic law of economics.

If lots of people want something and there's a limited supply, the price will increase to a level where the number of people able/willing to afford it balances the amount available.

You might prefer living in a part of the commuter belt but that doesn't fit everyone's life. People who commute daily would spend thousands on rail fares and I have calculated that buying a 2 bed flat in zone 3 is cheaper than a house in the commuter belt (and with a budget of 400-550k, I will not get a large enough house in the commuter belt to make it worthwhile and in any event my DH would prefer to live near his mum who lives in London. I sometimes dream of moving to St Alban's but it would probably be to another flat on my budget so even though my heart says yes, London is probably a wiser investment

DH's mum was in a 1 bed flat with 3 kids in the 1990s for 7 years until she could upgrade in London (needed to be near synagogues) so even years ago, there were compelling non work related reasons to be in London. You like gardens but not everyone does, my colleagues who have gardens are always moaning about maintenance and put artificial grass in theirs lol, I am quite happy with my communal garden!

I also know people who send money back home so for them they would rather live in a tiny place in london and earn London salaries rather than spend the money on commuting. Also it's all relative- what is a tiny place to you may be acceptable in other cultures where people are already used to living with 10 other extended family members. Also London has many ethnic minority communities which allow people to replicate aspects of their lives back home; for example, tiffin service where you can get 2 curries daily and not need to cook for the price of £100 a month (probably not available in Surrey!).

And of course at the other end of the spectrum, London offers a breadth of entertainment opportunities. My husband gets to go to lots of world class classical music concerts at £5 per ticket (under 35 discount!). There are lots of great restaurants. We don't need a car (the £2500 per annum we save is 50% of our holiday fund so we can have 6 short holidays abroad every year). I prefer all that to living further out and spending my disposable income on a car and rail fares.

It's the central financial, cultural and hospitality centre of the country. It's the seat of the government. Most capital cities are disproportionately expensive, or they are like New York - which is all if the above bar the government.
Having just discovered a lovely old pub down a pretty little cul de sac lined with charming little Georgian terraced houses, I'd move in a shot (I live in Zone 3). The lunch prices were expensive (£19 for onion tart tatin with a few new potatoes) of course!

Your question can be split in two: why is it more expensive to live in a city and why is London a particularly expensive city?

I live in a european city and the difference is even more stark. We live in a 2 bed flat about 3 km from the center. A studio in the actual centre is way more expensive than our flat. Going the other way: about 5 km out we could get a 4 bed flat. Outside of the city we could get a house with a garden. In the country proper, we could a mansion/farm.

Every capital city is much more expensive than the rest of their country, generally.

More jobs, better paid, more cultural activities. Livelier. Etc etc etc.

It might also be because landlords can charge so much. They receive housing benefits through their tenants.

https://www.theguardian.com/society/2023/apr/18/private-landlords-in-england-get-16bn-a-year-welfare-for-non-decent-homes

Historically there wasn't such a huge gap between London and the provinces. It is the emergence of London as a global financial centre as well as the attractiveness of London to international investment. Furthermore the growth of Asia has created many millionaires, and their second language is chiefly English. They are therefore more inclined to invest in the Anglosphere and London is a top choice given its accessibility.

Basic supply and demand. Lots of people want to live in London.

Why do lots of people want to live in London?

• culture
• history
• access to a wide variety of well paid jobs
• opportunities
• decent climate
• Good links to the rest of the world (Eurostar, large, busy airports)
• International populations
• A reputation for tolerance
• creativity
• English is the first language
• Very safe compared to many other large cities

As people have said all capital cities are more expensive than the surrounding areas. London is a world city, which makes it a very attractive place to live to people from across the world, not just the UK. Which in turns supercharges prices.

I think during the COVID work from home boom the rest of the country got more expensive whilst London stagnated a bit. Demand has swapped back again now.

It’s because the world and his wife want to live in London. It’s a global city. It is also a great city for all the reasons given by pp.
I wish it was cheaper too but I think those days are gone.

Because if you live in a commuter town, and actually have to commute, that is very expensive, like £5k-£6k a year. Whereas if you live in london, you can cycle, walk or use public transport which is far cheaper.

The mega rich from abroad plonk their spare millions in London property because it's a safe investment.

That has a cascading effect all down the ladder meaning ordinary houses fit ordinary people are unaffordable and we all have to pay to top up worker's rent payments.

We should ban foreign ownership of property like so many other countries do.

I think l would still put up with that compared to high rent prices,sharing a house with 20 others ,noise problems ,so lack of quality sleep.and even slow stop at lots of stations train within London travel

But no money in your pocket ,because it's all gone on rent

Money laundering. And all those crap but expensive flats they build aren't really for living in. They are safety deposit boxes in flat form for foreign money. It's ruined London and I hope the law is changed to reduce this, because this money doesn't actually benefit the city.

Too few houses, too many people. Wealthy investors buying up swathes of property and pushing prices up.