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London real estate prices remain deeply silly

Commuters board an underground train at King's Cross station in London April 29, 2014. Millions of commuters faced transport chaos on Tuesday after eleventh-hour talks failed to avert a two-day strike on the London Underground train network over plans to cut jobs and close ticket offices. REUTERS/Neil Hall (BRITAIN - Tags: BUSINESS EMPLOYMENT TRANSPORT POLITICS TPX IMAGES OF THE DAY)
Reuters/Neil Hall
As English writer Samuel Johnson said, “When a man is tired of London, he is tired of life.”
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It was another month of strong property prices in London in July. Home prices were up more than 19% for the month, compared to July 2013, according to the Offices for National Statistics. London prices have outpaced price run ups elsewhere in the UK, where home prices were up 11.7% over the same period.

Mix-adjusted average home prices for all London homes rose to £514,000 ($837,200).

There are all sorts of explanations for the surge in London real estate values, from good, old-fashioned supply and demand dynamics (tight development regulations, solid economic growth) to an onslaught of foreign buyers.

Both forces are at play. But popular outrage about the role of foreign money in the run-up has become a burbling political issue. (Solid numbers are hard to come by). Plans for London’s new high-frequency rail extension, Crossrail, may eventually relieve some of the pressure when the system starts running in 2018. Or perhaps not, if the boom in investment gets ahead of actual construction.

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