London has a unique property market. Prime and emerging-prime areas of London are driven by people who move to larger and “better” located properties not because they really need to, but because they want to. Nothing soothes a burgeoning ego more than an SW3 postcode.
Political rhetoric aimed at plundering this – apparently under-taxed – asset has revealed the fragility of these egos as transactions have halved year-on--year as a result. But will these figures bounce back after the election?
I think so. Looking back over the last few years the main drivers of the prime central London market, followed by the re-rating of the emerging-prime areas surrounding it, has been global instability and a weak currency. Well, sterling is still languishing and, if we could tear ourselves away from domestic politics for ten minutes, we’d see a bellicose and economically wounded Russia, the Saudis opening up a front in Yemen, the Greeks apparently preparing us for the largest event in recent European memory and instability spreading in the Middle East.
So while we in London may think we’ve achieved safe haven status, we shouldn’t make assumptions until we’ve looked at some of the worrying comments coming from non-doms. Love ‘em or hate ‘em, some of them are huge net contributors employing thousands of people. The other day, one was trying to explain to me what makes London so attractive to the wealthy. He said notable factors were its political and legal stability, the Greenwich Meridian and tax predictability. Remove any one of those, he said, and London’s world status is threatened.
The irony is that the result the wealthy want could be the biggest threat to the prime property market; a Tory majority followed by an EU Referendum for 2017. If a Scottish referendum sparked a hiatus in sales, imagine what a threat to leave the EU could do.
City A.M.'s opinion pages are a place for thought-provoking views and debate. These views are not necessarily shared by City A.M.