London's record-high population creates real estate challenges

London is now home to an all-time high of more than 8.6 million people, according tostatistics released earlier this month a population boom that iscreating many real estate challenges for the British capital.

The last time Londonhad such a large population was 76 years ago, at the beginning of the Second World War. The war,along withfierce bombings, forced manyresidents to flee the city, setting off decades of a steady population declineuntil an upturn began in the mid-1980s.

In the last 25 years alone, the number of residents increased by almost two million astaggering numberconsideringthe entire population of the City of Toronto is about 2.8 million.

Theres a real housing crisis .The housing thing is really very problematic.-Prof. Michael Batty, geographer at University College London.

Analysts say the increase is being fuelled by immigration,from the United Kingdom and other areas of the world, and natural factors such as a rising birth rate and longer life expectancy.

To many living in London, the city is simply the place to be.

It has that certain je ne sais quoi, said Amy Price, a born and bred Londoner.

Challenges of a metropolis

But London'sburgeoning population has also createdmany challenges:

• The cost of living is notoriously expensive.
• The transportation system is regularly overcrowded.
• It's widely accepted thecity isin the midst of a housing crisis.

Big [population] increases of this kind are very difficult to accommodate, said Prof. Michael Batty, a geographer at University College London. Theres a real housing crisis .The housing thing is really very problematic.

It has been so problematic for some that research by U.K. statistics agencyYouGovlast summer foundmany workers were considering leaving London due to difficulties paying theirrents or mortgages.

In addition, the Office of National Statistics has reported that house pricesare rising by nearly 20 per cent annually, a much higher increase than in other cities across the U.K. London'syoungest professionals were the most skeptical of their future in the British capital, with 70 per cent of 25- to 39-year-olds surveyed saying their housing costs made it difficult to work in the city.

"I call it the 'London Premium,'" said Liz Reynolds, an Australian who moved to the city 10years ago. "You pay a lot more here than youdo in a lot of other cities internationally."

Reynolds and her British husband, who live on the outskirts of the city, recently discussed moving away.

"We'd like to live closer in, but I'd say we'd almost consider leaving and moving elsewhere in the U.K.,if not Australia,because of the cost," she said.

Appearing to be attuned to the worries, Mayor Boris Johnsonwarned during a speech in January at a government dinnerthat a lack of housing is one of the biggest challenges facing London.

He hasvowed to ensure the development of more affordable homes in this financial year than inany yearsince 1981.

'Iceberg homes'

The economics of thehousing challengehave helped fuel the development of new real estate trends, particularly the growing popularity of building basement additions under already builthouses, according to architect Ian Hogarth.

Theconstruction of such basement housingis becoming increasingly prevalent in Londons wealthiest neighbourhoods.

For example, the Royal Borough of Kensington and Chelsea received just 46 planning applications for basement additions in 2001,compared to 450 in 2013.

Dubbed iceberg homes, the extra space created by a new basement is often used for in-home amenities such as gyms, swimming pools and cinema rooms.

Its to get the most out of a site, said Hogarth. Where land is expensive, you have to use the most economic way to get the most out of it.

People dont want to lose the money in moving but they want a bigger house."

When you live next door to one of these [basement construction sites], it's absolute torture.- Karl Sternberg, Kensingtonand Chelsea borough resident

But whether they make economic sense in solving the housing needs of the citys rich, so-called iceberg home have set offnegative reactions from neighbours affected by the construction.

When you live next door to one of these, its absolute torture, said Kensington resident Karl Sternberg. You cannot imagine how ghastly the experience is.

Part of city's appeal

With Londons population expected to top 11 millionby 2050, answers to housing and other problems will only become more pressing over time.

But Batty said that while the growing population is a source of many challenges, it's also a fundamental part of the city's appeal.

Its a love-hate relationship with London. Its expensive, incredibly expensive, quite hard to move around, he said. But at the same time, its very rich and diverse.

Simply walking down the street is an experience.