Earlier this year Hull offered primary teachers two years' free accommodation, in a bid to reduce the size of its infant classes.
One and two-bedroom flats in the refurbished 1970s block will be available for pound;100 and pound;150 a week - at least one-third below the average rent for Hackney, according to estate agents.
The scheme has been backed by the six boroughs most affected by the teacher shortage, plus recruitment specialists TimePlan and researchers at the University of North London. The aim is to attract new and experienced teachers to London and to retain those put off by high rents.
Economists predict there will be no return to the housing boom and bust of the 1980s. But their soothing words are of little comfort to teachers unable to head south due to prices rising well ahead of the national average.
With interest rates still low, there is little chance of a brake
on the southern housing boom which many observers attribute more to supply and demand than to any underlying growth in the economy.
Julie Shaw, TimePlan's recruitment strategy manager, said: "I have spoken to a lot of teachers who love working in London but can't afford to stay. This seems to be one of the biggest reasons for the recruitment crisis."
Ms Shaw plans to persuade other housing associations to offer cheap accommodation to teachers within travelling distance of the boroughs in the consortium.
Ian Menter, who has been leading the North London University study on the recruitment crisis, confirmed that property prices were aggravating the problem. "It is something younger teachers become aware of as time goes on - if they want to buy property or have children," he said.
John Howson, of Education Data Surveys, which monitors teacher supply, says money will have to be found to make relocation a viable option for teachers.
Mr Howson said: "If the Government wants to provide a good education for children in London it has to address the issue, unless it is suggesting we evacuate our schoolchildren up North for a better life.