House prices in the City of London went through the roof last year as City workers splurged and foreign buyers snapped up London property.
But with more lay-offs and less bonuses on the cards this year, the Centre for Economics and Business Research (CEBR) forecasts an “almost stagnation” in London property prices.
The think tank said that there is a tight correlation between job losses and London property prices, as the City workers are among the highest earners. It estimated that the number of City jobs fell by 8.5 per cent last year while bonuses fell by 8 per cent.
Shehan Mohamed, a housing economist at CEBR, said: “City traders have tended to put their bonuses into property, either as an investment or via residential. There is now a dual effect. Bonuses are falling and jobs are going. Obviously job losses are more powerful as they put people in an untenable situation. Bonuses tended to be used as a down payment. Less bonuses mean less potential new buyers bidding up each property.”
Adrian Overington, director of the Richmond branch of estate agents Jackson-Stops & Staff told The Guardian that although they saw a lukewarm demand last year, their business was completely steered by foreign investors.
“I don’t think I’ve sold to a banker for the last six months. We’re being completely fuelled by foreign investment: the Italian, Spanish, Greek super-rich are heading to invest in a safer economy,” he said.
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