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

The last time London had such a large population was 76 years ago, at the beginning of the Second World War. The war, along with fierce bombings, forced many residents to flee the city, setting off decades of a steady population decline until an upturn began in the mid-1980s.

In the last 25 years alone, the number of residents increased by almost two million — a staggering number considering the entire population of the City of Toronto is about 2.8 million.

There’s 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's burgeoning population has also created many challenges:

The cost of living is notoriously expensive.

The transportation system is regularly overcrowded.

It's widely accepted the city is in 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. “There’s a real housing crisis .…The housing thing is really very problematic.”

While many Londoners have expressed concern over the high cost of living in the city, new upscale residential developments are being built in some of the capital's most desirable areas, including these condominium buildings on the banks of the Thames River. (Pascal Leblond/CBC)

It has been so problematic for some that research by U.K. statistics agency YouGov last summer found many workers were considering leaving London due to difficulties paying their rents or mortgages.

In addition, the Office of National Statistics has reported that house prices are rising by nearly 20 per cent annually, a much higher increase than in other cities across the U.K. London's youngest 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 10 years ago. "You pay a lot more here than you do 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.

Prof. Michael Batty, a geographer at University College London, says the city is facing a major housing crisis, due in part to the burgeoning population. (Pascal Leblond/CBC)

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

He has vowed to ensure the development of more affordable homes in this financial year than in any year since 1981.

'Iceberg homes'

The economics of the housing challenge have helped fuel the development of new real estate trends, particularly the growing popularity of building basement additions under already built houses, according to architect Ian Hogarth.

The construction of such basement housing is becoming increasingly prevalent in London’s 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.

Basement construction sites have sprung up in large numbers across Britain's wealthiest neighbourhoods. Advocates of the additions say they are an economic way of adding space to a home, but many neighbours have complained about the disruptive construction. (Pascal Leblond/CBC)

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.

“It’s 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 don’t 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, Kensington and Chelsea borough resident

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

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

Part of city's appeal

With London’s population expected to top 11 million by 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.

“It’s a love-hate relationship with London. It’s expensive, incredibly expensive, quite hard to move around…,” he said. “But at the same time, it’s very rich and diverse.”

“Simply walking down the street is an experience.”