What you're missing is the fact that the prices of real estate in world cities are no longer being influenced by actual, RESIDENTIAL demand. The foreign investment aspect is horrific in London, and then throw in the governmental aspects which favor large, corporate development conglomerates over smaller developments with lower price points.
But there is load of residential demand. The population living in London is increasing all the time [1]. Certainly, there's also speculation, but the speculation is not unfounded, like those empty cities in China. People do want to live in London, even at the current prices - more and more people every year.
Indeed, and that has long been the case. For a very very long time, people have been talking about unaffordability for ordinary workers leading to a price crash - but this has never happened due to insatiable demand coupled with low interest rates.
Of course London is expensive but equivalent accommodation in places like Paris, New York, SF, and Singapore isn't that far south per sq meter, especially as a percentage of salaries.
Unaffordability is also a red herring - when prices became unaffordable in Japan, lenders just introduced longer multi-generational mortgages. While that is obviously distasteful, it illustrates that demand is sufficient for even those kind of deals to get taken up.
This isn't to defend political inaction on the issue, but many people protesting don't seem to have a sufficient grasp of the fundamentals to make cogent proposals that could improve the situation. I believe the foreign investment market is already slowing but if you wanted to make a dent in it, you could introduce duties or prohibitions on foreign owners and/or vacancy.
We are starting to experience this in Toronto. For perspective, housing is considered fairly expensive in this city, and a 1 bedroom apartment will cost approximately 1000 CAD here. Per the article, it would cost 2300, and foreign investment will assuredly take the price there within a few years at the rate things are going now. It's absolutely terrifying.
What you're missing is the fact that the prices of real estate in world cities are no longer being influenced by actual, RESIDENTIAL demand. The foreign investment aspect is horrific in London, and then throw in the governmental aspects which favor large, corporate development conglomerates over smaller developments with lower price points.