The deputy mayor of London, Kit Malthouse, has called for regulation to be loosened so that new houses can be built on London's greenbelt.
He said that London's boundaries hadn't been reviewed since 1965 and that the "time was ripe" for housing deregulation.
Malthouse described the current housing shortage in London as "an emergency", comparing it to Dutch 'tulip mania', the 17th century phenomenon in the Netherlands in which the price of a tulip bulb was inflated to 10 times the salary of the average skilled craftsman.
Speaking at the Cities 2030 event in London, he also called for a removal of barriers to market entry for small firms.
The last big wave of London house building was spearheaded by SMEs, he said. Now though, with "endless red tape" in the form of social housing requirements, stamp duty and corporation tax, he said such firms find it impossible to enter the market.
According to new Nationwide data, the pace of house price growth in the UK has picked up to its fastest rate ever.
Nationwide said in its monthly index that the average price of a UK home hit £186,512 (€229,180, $312,397) in May, an 11.1% increase over the year - the quickest on record - and faster than April's annual rise of 10.9%.
It was the thirteen successive monthly increase, with the average price rising by 0.7% on April.
Meanwhile, a monthly report by Markit, which compiled data from surveys of construction sector purchasing managers, showed that there was "another surge" in house building during May, as UK construction firms react to the ever-weakening housing supply.