What will happen to house prices in central London?

Property: What will happen to house prices in central London - at Moneyweek.co.uk - the best of the week's international financial media.

They'll drift upwards slowly, argues property developer Richard Collins.

Those who are gloomy about the residential property market in central London are ignoring its special characteristics. It is characterised by a tight inventory and a high level of international demand and cash buyers. Demand almost always exceeds supply, largely because at the top of the market there isn't much pressure to sell. If vendors don't get the prices they want, they often refuse to reduce prices to what buyers expect, or withdraw their property from sale. At the same time, the demand is truly worldwide. In some new developments, foreign purchasers account for 70%-80% of sales. This should be no surprise: London is not only a cultural feast, but an effective tax haven for rich foreigners and the financial centre of Europe. The City of London itself generates 17% of UK GDP and thousands of jobs, and its occupants require quality housing.

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