If brexit didn't end this, then it's probably a pretty stable system. It sucks for locals, but there are far worse places to over extend yourself on housing than in London.
Yes, it will. When people get shoved into tiny homes with their parents and children and have zero hope for any future on their own, you will see the people say enough is enough. They will march. They will protest. They will vote. They will clean house.
The sort of person who could afford a nice house 3+ decades ago and spent the intervening years living in London isn't likely to move to somewhere more rural just because they can realise an investment.
But in London these houses do sell, normally very quickly (and bullshit apartments in shiny new blocks that are in same price bracket I guess same, generally they do seem to sell, but I assume that's just parking money for tax purposes so not quite same thing).
Agreed.
As to the question of who has that kind of money: you're talking about income from employment, not assets. Maybe there are a lot of people with assets that put them in reach of £2-3M homes. And of course there are foreigners who don't work in the U.K., like Saudis, Russians, and Chinese.
A quick google suggests that a £100K income is in the top 3% in this country, and top 1% is about £176K.
Sure, there's a few hundred football players averaging maybe £3M a year who can thus buy maybe a £15M palace, but if you go on a property site they could each buy one and still have pages and pages of places left on the market.
Similarly there's a bunch of finance/media/law people who've climbed to the top of the greasy pole and could afford a £3M house. But how many can we really be talking about? A few thousand? Ten thousand? Are there really that many MDs and law partners in London?
Average income is still well under 6 figures in this country, and I know a load of doctors who are only just scraping into that category in their 30s. So if you're just scraping into 6 figs as a highly trained and rare specialist, how can there be so many houses that cost 7 figures?
Even if you add parental help, how many people who are splitting inheritance between 2/3 kids is it actually going to help?
I suspect a lot of people have actually drawn on all reserves: found a high income partner, got help from the parents, got a max leveraged mortgage, and possibly some have lied about their income.
I get the feeling it will end badly.