You're probably overlooking the change in the quality of the good. Demand in London is highly elastic. If a lot of new sleeping units come on to the market, the

You're probably overlooking the change in the quality of the good. Demand in London is highly elastic. If a lot of new sleeping units come on to the market, they will be filled easily because lots of people want to live there. Now suppose we divide old units of accommodation priced £ in two (halve the slope of the supply curve). The price of a new unit will be close to £. But an old unit then costs nearly 2£. So you have a choice between slum housing and coughing up double the rent.