Bonus reductions may slow London prices
Whilst the increase in London house prices appears to have been little affected by the five rises in the base rate in the past year, some property experts are now predicting a slow-down in the market.
In the past, City bonuses have fuelled property inflation in the capital but there can be little doubt that the recent turmoil in the stock markets will lead to a reduction in the annual bonuses handed out this year.
In 2006 a record £8.8 billion was paid out but this year some analysts are predicting that the figure will be 20% less, with those working in the high risk areas, such as credit derivatives and prime brokerage, worst affected.
At the same time there is growing evidence that London house prices are responsible for an exodus of the city’s inhabitants.
London Councils, which represents 33 local government bodies, recently issued a report on the capital’s housing crisis, in which it estimated that 20,000 residents are leaving London each month.
As a means of addressing this, the capital’s councils are asking the Government for an additional £1.6 billion to provide 15,000 affordable houses.
However, figures from the Office of National Statistics show that the population of London is still rising and currently stands at 7,512,370.
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