The London property market has seen a sharp increase in the average house price. If we go back to the 70's the average UK and average London price were almost the same, however since than the gap has increased quite dramatically. The average property in London is +£400k, whereas in the UK this is almost half.

How long prices will increase till the bubble will burst? Some say property prices tend to double every 8 years, if that's the case then in few years time the average price will be £800k, however this is not a fair balance compared to the average salary in London. My question whether the world has seen a similar property boom like in London (throughout history) where there is an imbalance of property prices & income, prices shooting up to such an extend that they become unattractive/ unaffordable? If so it would be nice if you could provide some reference as I am interested to study this into more detail and understand what the effects were of such highly priced market and how the economy responded?

  • $\begingroup$ Metropolitan property rents are subject to Matthew effect which is much towards to sociology and game theory. Simulation of such effect can be observed under Markov chain. $\endgroup$ – mootmoot Jan 3 '17 at 14:09
  • $\begingroup$ Has the Matthew effect taken place somewhere else? $\endgroup$ – Sharingan Jan 3 '17 at 23:37
  • $\begingroup$ Matthew effect is just a general term of describing exponential growth of multiple interactive effect, taken place when multiple factors taking place cumulatively. E.g. resources, trades, population, jobs, utilities. The present day example of boom and downfall of such effect is Detroit : where the key factor contribute to the boom depleted without replacement, it will went opposite direction. $\endgroup$ – mootmoot Jan 4 '17 at 9:08

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