The housing supply has very little price elasticity, at least in London. Demand is also inelastic, which leads to some counterintuitive results. Let's say that

The housing supply has very little price elasticity, at least in London. Demand is also inelastic, which leads to some counterintuitive results. Let's say that you destroy 5% of housing (a catastrophic flood). Prices will double. Dumbasses will assume that housing became more desirable. ("People really want to live here! Prices are going up rapidly!") No, it just became scarcer. However if you conflate price and value, which most people do, that disaster (that reduces quantity by 5% but doubles prices) will be taken to cause a 90% improvement in "value". Wrong. See also: 9/11. After the terrorist attack, prices in Manhattan actually went up as speculators bet on future supply compromise/destruction in NYC real estate. There was a brief dip in Lower Manhattan (panic selling) but the more adept speculators bought, creating the morbid 9/11 Boom in NYC real estate. Slight margins in supply problems have huge price effects. That is the story of housing. That's why it's so infuriating when upper-middle-class people get rent control through connections. It's not that there are many of these people-- they're much less than 1%-- but that they have such a disproportionate impact. The global elite's parasitism is just one catastrophe that is driving up prices. It doesn't take many houses to be pulled off the market to push them up by huge amounts.