Tying this in with the other thread about jobs in London, it seems that the problem lies (as was discussed earlier) in expectations, but also in the discounting of many of the positives about living there. I don't just mean the exciting stuff to do, but also the availability of jobs, the possibility of career progression, the prestige of the type of work on offer (calibre of clients, complexity of work) etc etc. Those are things that have a value, even if they don't provide the lifestyle that some expect to be derived from them.
There is also the problem, as already mentioned, of comparing current conditions with those of our parents. Whilst a lot of them don't realise it, they were part of a unique golden age. Economic circumstances meant that many of them had stable jobs, a favourable property market and generous final salary pensions. There is pretty much nobody in their position these days working in the kind of jobs they did, and if there are, they are a retiring breed.
Housing costs are the main issue, of course. It's not true to say that there is no social housing being built. There is, and it kept going through the recession. The demand is large, though, so individuals may not see it as being accessible. A rise in interest rates would ensure a huge correction, but no politician would want to oversee that baby. Anecdotally, I live in an area outside London with relatively high house prices and I know that there has been a large amount of sunk discretionary spending financed from equity on the back of rising house prices. So, don't look to the Jones'. They are in the shit come any correction.
thecatinjapan is right, though. This is spin.