The prime property market in the UK was described today by Savills as a bit like a pint of Guinness where the froth is coming off. The ‘helter-skelter’ market at the beginning of the year had buyers paying tomorrow’s prices today; that situation is coming to an end.
Savills research predict that growth in the prime property market next year will reach 5% in central London and 4.5% in the prime country market. This is a considerable drop from the current annual growth of 27% and 11% respectively.
The prime London and country property markets are far less influenced by fluctuations in interest rates but the volatility in the financial markets and fall out from the credit squeeze will play a party.
‘This has led to a revision in the expectations of City bonuses, which are likely to be down from £8.8bn to about £7bn this year.
The Centre for Economic and Business Research has stated that City bonuses could be cut by between 10 and 15% this year.
‘We estimate that about £2bn of bonuses will be spent on property compared to last year’s £5.5bn with most of these purchases being main residences rather than investment properties.
‘Nevertheless,’ concludes Lucian Cook, head of Savills residential research, ‘there is sufficient demand from other sources to underpin the market over the coming 12 months. There is still a lack of the very best property to satisfy demand, particularly in London, where the market also benefits from strong overseas demand drawn to a benign tax system for non domiciles., the position of London as a global financial centre, being the best place from which to ‘work the world.’