Learning from London's Comeback

A recent post on Citymetric.com suggests that after losing population for decades, London will soon reach its pre-World War II peak of 8.6 million people.  London last achieved this population level in 1939, and lost nearly two million people after World War II, bottoming out at 6.7 million in 1988.  Can we learn anything from this?  Why, yes we can.  To name a few things:

1.  One common pro-sprawl argument has always been that sprawl exists in Europe and is thus inevitable.  But the recent growth of London reminds us that in Europe as well as the U.S., cities can rebuild and become more desirable again.

2.  But this growth comes with a cost.  London's rebirth has been accompanied by exploding housing costs, perhaps because more people creates more demand for housing. (Or to put the matter another way: it does not seem to be the case that foreign rich people buying condos are the primary cause of high housing costs). 

3.  The common anti-market solution to high housing costs is to limit construction, on the theory that new construction creates more demand.   But London seems to have more or less tried this solution; according to the Citymetric article, "Since 1992, when London started to grow again, housebuilding has been barely a quarter of the 1930s rate."