Recent figures information by CEBR (Centre for Business Research) projects that London’s housing market will come to a virtual standstill this year due to loss of jobs and stagnant wages. Most of the loss is within the financial sector which saw bonuses and staff cut as a result of a downturn in the economy. This will lead, it is believed, to a stagnating market on London property.
Although residential property has done better than the rest of the UK in 2011, this year could see a totally different market. Last year the market was influenced by earnings in the City, foreign buyers and a demand greater than a supply of homes. But with the financial sector expected to cut jobs for the second year in a row and annual bonuses projected to be cut as well, this is projected to have a radical effect on London’s residential property market.
It is being said that even the most optimistic analysts are forecasting little or no growth in the housing market due to this downturn in the financial sector because, as an economist for CEBR stated, traders have had a history of placing their bonus money in property investments. These investments have been traditionally in the residential market. With CEBR noting that these jobs have fallen by 8.5pc and bonuses were cut by an almost equal amount. This does not bode well for London property that has prices which have grown by almost 2pc.
The most significant aspect of the projected stagnation in property sales in London is the fact that jobs will be cut but overseas investors have kept the market going until now. In fact, last year alone property buyers in London accounted for greater than half the sales but the crisis in the eurozone could even affect that in the coming year.
