>> The gap between London prices and those of the rest of the country is now at a historic high, and there is only one way to explain it. London houses and apartments are a form of money.
This leads to a number of things:
1) The very British sport of "extending" and, really, slapping extensions on absolutely everything.
2) Avoidance of any actual, structural work. Completely modernising a flat (or, worse even, a house) is expensive, i.e. you risk spending a lot of money without the certainty that you will get all of it (and, ideally, more) back.
3) In connection with the point above, this means "adding value" usually really means painting things over, plastering things over and superficially "fixing" (i.e. covering up) the most obvious flaws.
All of the above leads to an upward spiral, where everybody tries to sell essentially the same places for more and more money. Give it two or three rounds on the spiral, and a house that used to be, say, £300,000 is now £400,000, with nicer visible features but the same rotten core.
The other problem with London property prices is that they influence the prices of most of the South-East of England, with certain places (within commutable distance) experiencing the same price-hikes.
I wonder if this is in part because, now that our work is less social, we want our environment to be geared toward more social, i.e. big cities.