Luxury Property Market Taking A Hit In London?
The luxury property market is continuing to see prices fall. Unlike 2 years ago when there were twice as many buyers as there were homes available to buy the number of buyers has dried up and luxury homes at the top end of the market are being affected. There are a couple of reasons for this but I would suggest that the main reason for the fall in the number of buyers is down to the price of oil and the affect that this is having on the Russian economy.
Most of the luxury homes were being bought up my very rich Russian individuals for cash and these buyers have simply disappeared. The Russian economy has also been hit with economic sanctions and this is also another factor that has affected the ability of Russians to move their money around.
Of course Russians were not the only wealthy individuals that have dropped out of the market but a low oil price has affected everybody particularly the international property investors. There are reports that the market may have been affected by the changes in stamp duty but would this really bother anybody that is buying a house for £10m or £20m? I don't think so.
Stamp duty cost would not stop wealthy individuals from buying a pad in London. Many would argue that the London market has reached such high levels that a correction was inevitable and what we are seeing is normal.
Of course there are other reasons the market could be affected such as the threat of a mansion tax but would this really put off someone with £20m to spend? It does seem unlikely. If you are waiting for prices to start picking up again then you may be waiting a while because experts predict that the price of oil may not increase for some considerable time and that the oil price could fall even further. If this were the case could we see a sell of in the luxury market?
Nobody could have predicted that the oil price would fall as quickly as it has and the thought prices could fall a lot further will send a shiver through most of these wealthy buyers.