Multi-million pound homes in Central London expecting a fall

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by Kay Murchie

The cost of multi-million pound homes in prime London could decline in the short-term as concerns over City bonuses, job security and weaker financial markets have an effect.

According to official government figures, City bonuses amounted to £8.8 billion in 2006 and according to the estate agency, Savills, that allowed up to £6 billion of spending on London properties.

The estate agency, Savills, is anticipating minimal growth over the next 5 months and it is expected that prices will fall back by up to 5% between the end of September and the start of 2008.

A spokesperson for Savills said that houses priced between £1 million and £3 million are at risk of price falls – this is where City buyers make up the highest proportion.

Rich City househunters were buying with abandon between October 2006 and July 2007, but they have held back from making purchases over the last six weeks as doubts return about the jobs market and about bonuses being reduced from last year.

In the last 2 years, househunting has been popular in the autumn, however, confidence this time has been dented, probably due to rumours of investment banking job cuts already underway in America and fears that this will be repeated in London.

The Centre for Economics and Business Research (CEBR), an independent think-tank, is anticipating bonuses to be cut back by at least 15% this year as the turmoil in global financial markets takes its toll of investment bank profits.