So here’s a funny thing. Russia is in crisis, the Rouble is collapsing, and this is obviously going to have an impact on the top end of London’s housing market, where Russian nationals make up a pretty big share of the buyers. What do you think that impact would be?
Here, courtesy of Business Insider, is one possibility:
And here, courtesy of the Telegraph, is another.
In other words, the instability in the Russian economy is causing Russian buyers to flood into/out of the London property market, and this in turn is sending prices soaring/tumbling. Got that? Good.
What’s actually going on here is the inevitable process of over-simplification-through-headline (something of which CityMetric, of course, has never, ever been guilty, ever). The text of the Business Insider story, which quotes this piece on Bloomberg, makes clear that the top end buyers – the fully-fledged oligarchs, who are chasing properties worth £10m or more – are still very much in the market. London real estate is seen as a safe haven, the rouble this week isn’t, so Russia’s ultra-rich are currently taking the opportunity to turn the former into the latter.
That, though, is only the top end of the market. Those who are not quite as loaded are likely to still have their money in Russia, and will find it relatively difficult to get it out; by the time they have, that money will be worth less when converted into pounds and pence.
All this means that, although the collapse of the Rouble could mean more money going into agonisingly expensive London property, it’ll probably mean less going into the merely painfully expensive.
There’s something else worth noticing about that Telegraph piece. Even if more money is flooding into prices at the top of the market, all the people making these claims are estate agents – and estate agents, remember, have a financial interest in looking on the bright side here. In support of her arguments, one of those agents, representing Knight Frank, points to her firm’s web traffic. It’s… not the most compelling evidence there’s ever been.
At any rate – when you add all this to the recent downturn, the increase in stamp duty and the threat of a mansion tax if Labour win next year’s election, the outlook for London’s property market is as bleak as it’s been for some time.
Or, if you’re a potential buyer, as sunny.
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