Cover of MoneyWeek magazine issue no 502

Are bonds still safe?

3 September 2010 / Issue 502

Should you buy into the bond rally?

PLUS:

  • How to profit from high-tech bandages
  • The coming boom in bioscience
  • The hedge-fund genius who sacked himself

Excerpt

Even London’s property market can crumble

Think London house prices are immune from the price falls hitting the rest of the market? Think again. Black Brick – a property search agency – notes that in July, prime London prices fell for the first time in 15 months (down 0.5%).

Meanwhile, “lenders are slashing” the valuations they put on top-end properties by “up to 25%”, reports The Sunday Times. This won’t surprise anyone watching the crushingly awful stats coming out of the market. Property website Zoopla tells us that a third of the houses currently on sale are at reduced prices, while the Royal Institution of Chartered Surveyors says that new-buyer enquiries have fallen just as the number of properties coming on to the market has risen; and gross mortgage lending fell again in July.

One drop in prime prices clearly doesn’t prove a trend. But the fact that the prime market moved in tandem with the wider market in July should concern prime London’s agents. Their general view is that their area is immune from slowdowns. Why? Because there is a shortage of quality property. Because high bonuses mean City demand will remain high; and because, as Black Brick says, “international interest in London property is unlikely to be affected by UK public sector job cuts, rising domestic taxes” and the glum economic outlook.

I’m not convinced.

• Read the full editor’s letter here:
Even London’s property market can crumble

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