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During 2013 property values in London sky rocketed. The rest of the UK seems up but not as aggresively. Would anyone offer their opinion as to why? One suggestion is that it is 'wealthy' overseas investors. But why would they choose London rather than say Paris, Frankfurt, New York or Sydney?

1. tax2. proximity to their native countries3. shopping4. the "light touch" from the authorities in the UK especially wrt to overseas wealth.5. the weather6. the beer

7. "the wealthy" want their children to learn English, not French or German

8. property values catch up London tube fares.

Interestingly I was looking at graphs based on the Halifax and Nationwide HPIs by region last night. It has confirmed to me that the price rise in London is much higher than the rest of the UK. The rest of the UK saw little growth after the GFC up until about a year ago. This places it still significantly below the pre-GFC high. However London has been much more fortunate moving to all time highs.Thanks for your answers.@Edouard - Hopefully London property will not be as sensitive to wind, flooding, leaves on the rail, unlocatable drivers, overrun works etc.

Well I wouldn't use the word "fortunate" There are a number of factors but ultimately, of course, it's a lack of supply of housing stock coupled with a ridiculous system of "housing benefit" which has spiralled out of control. Buy-to-let landlords receive rents which the tenants couldn't possibly pay because they're topped up by the government to the tune of hundreds of pounds per week (paid for by mugs like me).

The part of the increase that is due to flow of capital into the UK has some structure to it.A good chunk is down to the "rule of law premium", consider the following headline:"Government seizes foreign property in order to enrich powerful local interests"Form an ordered list of the countries where that might be said.At one extreme we have Russia, where corruption is so routine that it isn't that newsworthy and almost the opposite end of the scale is the UK.That narrows your choice down to about a dozen European states, but not the USA which through a mix of sanctions against countries they don't like and judicial corruption is not the safest place to put your core, "must never lose" money that will support your family after the situation in Russia, China or the Middle East goes bad for you.So if you've got (say) 100meg what do you do with it ?Given that even the worst downturn in UK property prices has never really been that bad and has always rebounded, it is a reasonably rational place to invest and of course the sort of people moving their cash to London like property.Ascaldo makes the point about learning English and if you are rich, there are few safer places to raise your kids and you can buy a good education.But being foreign, the investors are a bit vague about what the "good" and "bad" bits of the UK might be, so they invest in places they recognise and note I say "property" not "homes".That means the City of London is having huge office blocks built even though the only thing that happens there is finance and that hasn't been the best place recently.Literally next to it is Holborn (branded now as "midtown"where they stuggle even to attract Brits, much less foreigners and of course Mayfair, Chelsea et al are sucking in money so hard that a friend of mine who is merely rich by British standards is organising some sort of political effort to reduce the inflow. Stratford may have had the Olympics, but convincing a Russian to invest there is very very hard ,yet you can see the City of London from your window.So by the time you get outside London, foreign investors find they must trust local advisors which frankly they don't, at least not for core wealth protection.The areas that have seen the greatest price increases have very limited ability to take more housing by combination of regulation and simply there not being any space.Also as MaffF says, house building has never kept anywhere near domestic demand in the UK and has actually got worse, even before we allow for inward investment.Also on top of that the UK is for many Europeans the place they would most like to move to, Germany may in aggregate attract more but is a much larger country, less densely populated and Europeans tend to come to London and slowly diffuse over the country, this effect pushing up the lower end of the market.One implication of this is that if the UK left the EU, then the bottom half of the housing market would get hit quite hard as migrant workers went back to E.Europe and France.

QuoteGiven that even the worst downturn in UK property prices has never really been that bad and has always reboundedLondon house prices fell 7 years in a row in the 1980's, losing 37%. Just saying.

QuoteOriginally posted by: CuchulainnQuoteGiven that even the worst downturn in UK property prices has never really been that bad and has always reboundedLondon house prices fell 7 years in a row in the 1980's, losing 37%. Just saying.people forget ... but I don't recall it being as bad as 37%. Probably more like 20%.

QuoteOriginally posted by: daveangelQuoteOriginally posted by: CuchulainnQuoteGiven that even the worst downturn in UK property prices has never really been that bad and has always reboundedLondon house prices fell 7 years in a row in the 1980's, losing 37%. Just saying.people forget ... but I don't recall it being as bad as 37%. Probably more like 20%.It was bad, also in the Netherlands.It's like when you were young the sun was always shining

Prices in NYC, especially luxury end have been going insane as well. At the high end, apartments go at $10,000 and more per square foot. That's $100K per sq meter. Zerohedge had comparison between castles you could buy in Spain, France, and Austria and shitholes in New York at similar amounts. Priceless article. castles and tulips. Put that on top expectation of few years of de Blasio not cleaning Upper East side from snow makes me think of packing into proverbial farmer's U-Haul and doing my turn of "escape from New York". As a bonus i will spared the painful sight of reincarnation of Angela Davis as Dante De Blasio.

QuoteOriginally posted by: zerdnaPrices in NYC, especially luxury end have been going insane as well. At the high end, apartments go at $10,000 and more per square foot. That's $100K per sq meter. Zerohedge had comparison between castles you could buy in Spain, France, and Austria and shitholes in New York at similar amounts. Priceless article. castles and tulips. Put that on top expectation of few years of de Blasio not cleaning Upper East side from snow makes me think of packing into proverbial farmer's U-Haul and doing my turn of "escape from New York". As a bonus i will spared the painful sight of reincarnation of Angela Davis as Dante De Blasio.But the townhouse in Bed Sty for $8 million has sentimental value.Do Or Die Bed StyLol, I found a virtual tour of the neighborhood.

9. demand > supply10. asset class looks better than others11. a celebrity quant has moved into the neighbourhood

QuoteOriginally posted by: dweeb9. demand > supply10. asset class looks better than others11. a celebrity quant has moved into the neighbourhoodThat's no way to run an economy.

QuoteOriginally posted by: CuchulainnQuoteOriginally posted by: dweeb9. demand > supply10. asset class looks better than others11. a celebrity quant has moved into the neighbourhoodThat's no way to run an economy.Hmmm... Has anyone ever found a way to actually "run an economy"? It seems one either lets the mania of crowds run it into the ground or a bunch of arrogant self-anointed experts run it into the ground.