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I fully expect this trend to continue, and even possibly accelerate in to 2017. London has a real problem with wealthy foreign investors parking money in Londo

I fully expect this trend to continue, and even possibly accelerate in to 2017. London has a real problem with wealthy foreign investors parking money in London property; often, they don't even rent these out, leaving them empty. The new mayor, Sadiq Khan, has ordered the LSE (London School of Economics) to conduct a review in to this problem. I expect this to hit the confidence of investors (both foreign and domestic) using London property as a place to park money, and if it's as widespread as I think it is, prices will continue to decline as this "investment" disappears. This is fantastic news for young people who live and work in London and want to get on the property ladder; not so great news for the property developers who've been exclusively building luxury apartments that nobody can realistically afford - but I have trouble sympathising with them.

fredley 10y ago
It's affecting the top end of the market, but there's still a huge disparity between supply/demand at the lower end of the market that won't go away unless demand subsides (everyone leaves post-Brexit) or much more cheaper accommodation is built.
- nicktelford 10y ago
  I'm no economist, but prices in the top end of the market come down, making it more affordable, wouldn't this ease demand at the lower end of the market (as more people will be able to afford the higher-end properties)? I'm not convinced that Brexit will see the reduction in immigration that people seem to be hoping for; a "soft" Brexit is looking more and more likely.
  - fredley 10y ago
    Yes, but remember that the distribution of wealth (and related things like housing stock/demand) are heavily skewed towards the bottom-end. More availability higher up will ease demand lower down, but proportionally much less.
  - alva 10y ago
    From my analysis of London super prime ( I use two groupings £5-10m, £10m+ ), it appears that there is such a disconnect between this group and the "normal" London housing market, that they may as well be different countries. In some sections of the housing market, lets say £1m, a devaluation appears to have a significant effect on properties beneath that valuation. The correlation is extremely high. In this bracket of buyers you have (well off) working professionals, lawyers, finance etc. Rich by almost everyones standards. Lots of them around means lots of competition for a certain stock of housing. What you also have is high thousands of extremely rich people from around the world (particularly Russia, Saudi and other ME). London is a refuge for super high net worth individuals for a variety of reasons, culture, relative freedom, history, availability of beautiful mansions. The most important reasons probably being national stability (financial and security) as well as a comprehensive and enforced legal system. Not to mention, a subset of these buyers are parking money stolen from the people of their country. Try physically confiscating a 250 year old Mayfair townhouse! UK legal protections means a seizure of the property is unlikely/very difficult. The property desired by this group as so disconnected from usual London housing that it is unlikely to have knock on effects if prices decline. This type of person is not going to downsize to 'normal' housing. This is just something to bear in mind when reading reports on London property prices declining. The last year saw a single digit percentage drop in asking prices, except the majority of this was in the £10m+ plus range.
    - fredley 10y ago
      £1m is the price of what would elsewhere be considered a normal sized 'house'. You can't get anything with two bedrooms for less than £500,000. £1m is a good metric for London property.
      - alva 10y ago
        Agree with the last two points. The first however is an understatement. Outside London ( and commute belt ), £1m buys you a seriously luxurious house. Even in major, desirable cities like Edinburgh, £1m buys you a 6 bed, granite, Georgian townhouse in the absolute best spot in the city. London prices are seriously crazy.

fredley 10y ago

It's affecting the top end of the market, but there's still a huge disparity between supply/demand at the lower end of the market that won't go away unless demand subsides (everyone leaves post-Brexit) or much more cheaper accommodation is built.

nicktelford 10y ago
I'm no economist, but prices in the top end of the market come down, making it more affordable, wouldn't this ease demand at the lower end of the market (as more people will be able to afford the higher-end properties)? I'm not convinced that Brexit will see the reduction in immigration that people seem to be hoping for; a "soft" Brexit is looking more and more likely.
- fredley 10y ago
  Yes, but remember that the distribution of wealth (and related things like housing stock/demand) are heavily skewed towards the bottom-end. More availability higher up will ease demand lower down, but proportionally much less.
- alva 10y ago
  From my analysis of London super prime ( I use two groupings £5-10m, £10m+ ), it appears that there is such a disconnect between this group and the "normal" London housing market, that they may as well be different countries. In some sections of the housing market, lets say £1m, a devaluation appears to have a significant effect on properties beneath that valuation. The correlation is extremely high. In this bracket of buyers you have (well off) working professionals, lawyers, finance etc. Rich by almost everyones standards. Lots of them around means lots of competition for a certain stock of housing. What you also have is high thousands of extremely rich people from around the world (particularly Russia, Saudi and other ME). London is a refuge for super high net worth individuals for a variety of reasons, culture, relative freedom, history, availability of beautiful mansions. The most important reasons probably being national stability (financial and security) as well as a comprehensive and enforced legal system. Not to mention, a subset of these buyers are parking money stolen from the people of their country. Try physically confiscating a 250 year old Mayfair townhouse! UK legal protections means a seizure of the property is unlikely/very difficult. The property desired by this group as so disconnected from usual London housing that it is unlikely to have knock on effects if prices decline. This type of person is not going to downsize to 'normal' housing. This is just something to bear in mind when reading reports on London property prices declining. The last year saw a single digit percentage drop in asking prices, except the majority of this was in the £10m+ plus range.
  - fredley 10y ago
    £1m is the price of what would elsewhere be considered a normal sized 'house'. You can't get anything with two bedrooms for less than £500,000. £1m is a good metric for London property.
    - alva 10y ago
      Agree with the last two points. The first however is an understatement. Outside London ( and commute belt ), £1m buys you a seriously luxurious house. Even in major, desirable cities like Edinburgh, £1m buys you a 6 bed, granite, Georgian townhouse in the absolute best spot in the city. London prices are seriously crazy.