Simple lack of supply has been one of the drivers of London house prices for decades –but never more so than the present.
Housing supply is one third below London Mayor Boris Johnson's minimum target, according to estate agents Savills, and house prices in the capital were 11.3 percent higher in March on the same time last year, according to property website Rightmove's housing index.
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Meanwhile, London Plan estimates the city's population will increase by 1.2 million people to 8.6 million by 2031 - and these people all need to live somewhere.
Now, a change slipped through in Wednesday's budget will make it easier for developers to update London's crumbling old Victorian warehouses into flats and townhouses. The proposed relaxing of the General Permitted Development Order will make it easier for buildings to be repurposed.
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"Attention will undoubtedly be focused on small- to medium-sized sheds, which could potentially be converted into uniquely-designed luxury industrial flats and lofts – reminiscent of Manhattan's Soho in the late-80s or Brooklyn's DUMBO (Down Under the Manhattan Bridge Overpass) in the early-90s," Christopher Babatope, research analyst at estate agents Knight Frank, told CNBC.
Hackney in north-east London, and Greenwich and Woolwich in the south of the capital, are especially likely to see developer interest, according to Babatope.
The U.K.'s development planning process is notoriously labyrinthine, but the new rules should remove around six months to one year from the timescale, global law firm Eversheds estimated.
"This eliminates one stage of argument and focuses on technicalities needed to deliver a scheme,"Stuart Andrews, partner and head of planning at Eversheds, explained.
"The ability to change just in principle has freed up a lot of buildings, even in locations where there's restraint."
The focus of much development in London has been at the super-high end of the market, rather than at the quantity-rather-than-quality, middle-income bracket.
"This could result in some substantial changes of use in certain locations, where there are old Victorian warehouse buildings still in warehouse use," Roger Hepher, Savills' head of planning and regeneration, said.
The trend could also catch on in other major U.K. cities, like Manchester and Birmingham, once their economies start to accelerate further.
The Conservative Party, of which both Johnson and U.K. Chancellor of the Exchequer George Osborne are leading lights, is usually supportive of the property industry. However a number of Conservative members of parliament (MPs) are strongly against building on the so-called Green Belt – countryside land that is protected against development – and this latest measure could be one way of the party allowing more housing while keeping its backbench MPs on side.
- By CNBC's Catherine Boyle. Twitter: @cboylecnbc.