As a result London is now regarded the residential capital of the world, consistently outperforming the rest of the UK and overseas in terms of residential property price growth. According to Knight Frank's index of prime residential property for central London, price rises have averaged 14.5% per year compared to an annual equivalent of 10.5% during the Conservative administration between 1979 and 1997.

Unlike its predecessor, which used interest rates as a policy lever in controlling the housing market, Labour has implemented successive rises in stamp duty (transfer tax) levels, aimed specifically at trying to calm transaction activity at the high value end of the housing market in London. While the measure has proved unpopular in the marketplace, demand has been such that annual increases have been largely absorbed by the consumer as property values have spiralled upwards.

Labour also completed the phasing out of mortgage interest tax relief, which was started under the Conservatives, and was achieved over successive years. Even this measure has had little impact of the public's willingness to pay ever more for their property.