City bonuses continue to chase property

Reports that bankers and financiers are turning away from property as an investment channel for their bonuses may have been exaggerated.

While City bonuses are down, leading estate agents are reporting that executives in the City are as keen as ever to invest in property both in the capital and in rural areas.

Around £5.5 billion was invested by such purchasers in 2007 and Savills estimates that in 2008, the figure will be around £2 billion.

As a result, property prices in the most desirable areas of London are expected to remain high, despite a nationwide slowdown in the housing market.

Douglas & Gordon are forecasting that a shortage of “prime” London homes will have an even greater influence on the market’s direction in 2008 than in previous years.

Cluttons believes that prospective buyers looking for a bargain will be disappointed as: “Buyers are chancing their arm, but they are not getting away with anything.”

A survey published this week by Knight Frank shows that the prime Central London market continued to move upwards in December as City buyers remained in competition with international investors.

There is also evidence of a growing trend to purchase a home close to the office, with docklands developments in areas such as Shad Thames and Bankside becoming increasingly popular because of their proximity to the Square Mile and Canary Wharf.

However, property inflation in the capital during 2007 means that anyone purchasing a home for £1 million or more can expect to buy around 25% less space than a year ago.

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