We all know how London’s prime central property is like gold dust where a typical property is valued just under £1.5m, more than 6.5 times the national average.
But now a new research suggests that London’s most expensive properties might see a 20% fall in their value, if the US isn’t careful about its quantitative easing programme that affects global markets.
Economists at Fathom Consultants have found that London’s prime central London property has crossed the macroeconomic factors driving the market and is “vulnerable to a correction.”
The consultants points out that the three factors that decide prices of prime central London property are the value of pound, the performance of global equity markets and London’s “safe haven” status.
“It [the PCL market] is more overvalued than we’ve ever found it to be before – and our model goes back to 1985,” said Danny Gabay, director at Fathom and former Bank of England economist.
“Demand is not inexhaustible and supply is not inelastic.”
“It [the market] could inflate yet further – but we are now in a position where, once you’re overvalued I can’t predict where exactly the trigger will come from, but you are vulnerable to a correction.”
Separately, FTSE 250 property company Shaftesbury said today that London’s West End is “flourishing” as people wanting to live and work in the capital has reached “unprecedented” levels.
“London continues to attract unprecedented levels of interest from across the world from businesses choosing to locate and invest here, from visitors seeking to experience its unrivalled variety of attractions and from those who live and work here,” the company said in a statement.
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