Why is there now such shortage of places to live in London ? Increasing house prices, building of new flats ect?

Rich people from all over Europe are buying houses in London to protect their money from the inevitable failure of the Euro. Rich Europe from all over the Middle east are buying houses in London to protect their money from the dropping oil prices. Rich people from Russia are buying houses in London to launder their dirty money.

So that's how and why all the prices of houses and flats are rising so fast in London.

Flats that once housed families of nine now house some single people. The wealth of people has grown as family size decreased. 8.7 million require much more space today, since they can afford it.

london is a horrid place to live and they're mostly blacks and pakis but the poles have moved in too

Simple supply and demand and peoples expectations now and housing laws in place means that people do not live like they did 70yrs ago with whole families living and sharing one small room their whole life

*etc.

There used to be buildings called boarding houses. These were places where a live in landlord let rooms in the house to single people and couples. The bathrooms were often shared between several people and there were no rules about fire safety or anything like that. The accommodation was extremely basic. Houses too were often shared between two families. People were prepared to live in much smaller accommodation than they will now. Also the increase in the divorce rate means that there are more households so more individual accommodation is needed.

Supply and demand.
The population has increased quicker than property has been built.

A lot of more expensive property has been bought by "foreigners" many of whom do not live in the UK,they use the property for only a few weeks/months a year,the rest of the time the property is unused.