Inside Tiny One-Bed London Home On Sale At £275k

London's population is set to reach a record high of 8.6 million people, with housing expected to be a major General Election issue.

With limited space and prices that have gone through the roof, one survey suggests bricks and mortar could be as significant as the NHS in the ballot this May.

According to research by estate agents Your Move and Reeds Rains, one in six tenants (16%) say housing is the issue most likely to affect their vote.

Sky News visited what has been billed as the smallest house currently on the market in the UK. The tiny one-room home in Islington is just over 150 square feet, with an asking price of £275,000.

You have to climb on to the kitchen surface to get into bed, the dining room is a pull-out table, and you can touch opposite walls at the same time.

"Obviously the price is quite absurd but I don't think the project is absurd," says architect Chris Dyvik, who took inspiration from caravans and boats.

"You might see similar types of compact units being built. People need to be creative in London to survive with these housing prices."

It is unlikely anyone would live in such a place for more than a few nights at a time, but the fact that such a small space can command such a big asking price means questions continue to be asked about London's property bubble.

Last year, some 60,000 30-somethings left London, the highest number ever. Soaring house prices have put homes out of reach for most first-time buyers.

According to the Office for National Statistics, 67% of the 25 to 34 age group were homeowners in 1991. By 2012 this had dropped to 43%.

George Cheetham got fed up with prices going up and up during the buying frenzy in London last year.

"Week-by-week, house prices grew," he said.

"You'd go for a viewing in the same street one week and by the next it had gone up by about £10,000."

He moved to Bristol, buying a three-bedroom flat with a garden, something which would have been impossible in the capital.

"It just didn't seem a realistic market to buy in, it was very easy for us to say enough is enough" he said.

Soaring prices have been partly driven by foreign investors.

Estate agent Savills estimates up to 70% of newly-built properties in central London are bought by foreign investors, with many flats in prime locations lying empty.

Campaigners say many are "buy-to-leave" - expensive flats bought purely as an investment.

For investors from China, Russia and the Middle East, London is often seen as a safer bet than buying at home.

Some councils now intend to charge owners who leave homes gathering dust.

Councillor James Murray says Islington is one London borough looking at the issue.

"What we would hope is that if we write to an owner and they realise we have found them out, they would then at least rent it out or maybe even sell it on to someone who wanted to live there," he says.

"If they didn't, we could then go to the court to get an injunction and in due course the High Court could take whatever action they thought was appropriate to enforce it."

Chinese businessman Liang Huang buys and rents out properties in London, often to young professionals.

"It's quite stable, people are friendly and the finance environment is very safe," he said.

"Money comes in, they feel quite safe, secure, the return will be guaranteed."

A glut of posh developments, new capital gains legislation for foreign buyers and stamp duty changes have cooled the market somewhat.

But foreign investors and a shortage of new affordable homes means London is still a world apart from the rest of the country.