Sunday, Apr 12, 2015

Estate agents whinge that high end house buyers are deserting London

Financial Times: Super-rich shun London over non-dom plans, say estate agents

Ed Mead, a director of Douglas & Gordon estate agents, said his company had carried out 37 valuations in the past month for owners of high-end homes who were thinking of selling up, when the normal level is about six.
“It is like the 1970s again, when waves of wealthy people left Britain and it was a disaster,” Mr Mead said.
Sales of homes worth more than £2m have dropped by 80 per cent in the past year, according to Douglas & Gordon.
Both George Osborne and Ed Milliband are getting blamed for this, so there must be some element of truth in the article. It will be interesting to see if this does play out. If it does and gets some traction in the press, it will have a knock on effect as so much of London property value is based on speculative sentiment,

Posted by britishblue @ 10:16 PM (3267 views)
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1. sneaker said...

It was already happening. Repeat after me:
a. Oil nations: oil-price collapse
b. Russia: oil price collapse, sanctions, Rouble collapse, Putin demanding oligarchs bring overseas cash home
c. China: corruption crack-down, economic slow-down
d. Europe: if growth *returns* to Europe, there will be an exodus from London - reducing demand for rental and thus prices. Investments in the UK will be liquidated the money repatriated for use there
e. OECD: crack-down on tax havens and tax-avoidance
f. Private Banking: secrecy and tax-evasion crack-down (e.g. HSBC)
g. Political Risk in UK: EU referendum, SNP rising, UKIP disrupting, Tories posturing against the "offshore oligarchs" now Labour vs. the non-doms
h. if Sterling weakens, any non-Sterling investor will be hurting and look to sell out

Super-priced London property has been going down since May of last year (around the time Russia annexed Crimea). Some coincidence!

Labour threatening the non-doms is the final nail in the coffin and we could see "PCL" drop 50% or more and possibly more in some special situations. That £130m apartment in SW1 would look expensive at £13m, for example.

If you don't want bust ... don't have a boom.

Monday, April 13, 2015 12:02PM Report Comment

2. taffee said...

Some property in Japan fell over 90% which seems.astonishing until you do some math as above

Why couldn't a £100 million property fall 90% and still be expensive?

Monday, April 13, 2015 02:21PM Report Comment

3. britishblue said...

I wonder how many rich people are eying up Greece, Spain and Italy for the day they leave the Euro and have a local currency in a dramatically devalued exchange rate.

Monday, April 13, 2015 04:21PM Report Comment

4. bidin'matime said...

There's also the fact that they'll pay CGT on them from this month. They have the option of time-apportionment or re-basing.

Time-apportionment works by taking the number of days since 5/4/15 and dividing by the total number of days since purchase - then applying that fraction to the total gain; the more days there are between 5/4/15 and the date of sale, the bigger chunk taxable. Re-basing simply means using the 5/4/15 market value as the cost, so they pay tax on the rise from now.

Either way it's bad news for them: those who had great gains before and are facing losses going forwards aren't going to time-apportion, because that would bring the earlier gains into the calculation. But if your strategy is to rely on losses to reduce any CGT, you might as well sell! And if you're sitting on losses and believe the market will bounce back, then do you hope for break-even and then sell (no tax)? Or do you sit tight and pay tax when you're in profit? Or do you just get your money out and put it somewhere else in the world, where you wont have to worry about tax at all....?! (If any oligarchs are reading this, I'd be pleased to give them - sorry, sell them - some tax advice...! ;-)

Monday, April 13, 2015 05:37PM Report Comment

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