Posh Property Plummets

The property slide is touching everybody. There won’t be much sympathy for them but even the very rich are feeling a nip, if not quite the pinch, of the Great Crash. Top end blight has begun to grip monied enclaves which were once thought to be insulated from the buffeting from which millions of people lower down the property chain have suffered.

Toff estate agents Knight Frank (KF) said house sellers in some of Britain’s most rarefied corners are withdrawing their properties from the market because of the downturn. It is thought that many would-be sellers have decided to hang on for as long as they can in the hope that the uber-rich end of the market will eventually begin to pick up.

KF reckons the number of £10 million plus houses for sale has fallen by 34 per cent in the past year. Savills, another agent generally regarded as being at the grander end of the market, were reported as saying sales of properties in the upper echelons had dived.

It was once thought seriously expensive houses might have been immune to the blight that has contaminated the rest of the market. But it has not been so. Even a great influx of super-rich foreigners into the UK – especially the Russians – has failed to stop the rot.

The tsunami which has swept through property has begun to affect the type of residential housing which has traditionally been the preserve of buyers who are global billionaires.

A reason for the fall in the price of top end properties – and the hasty retrieval of their ‘For Sale’ notices – is that there has been far less City and Canary Wharf bonus money sloshing around in London’s smartest corners: Mayfair, Belgravia and Knightsbridge.

An estimated £600 million from bonuses went into ‘prime’ London properties in 2008.
It equated to seventeen per cent of a total bonus pot worth about £3.5 million. That was a massive drop from 2007. According to the Centre for Economics and Business Research high-rollers in the City ploughed £3.19 billion in bonuses into top property in 2007. It equated to 40 per cent of the £8.5 billion paid out in bonuses in 2007.

Prices for prime properties were at their highest in March 2008. KF says since then top London prices have fallen more than 21 per cent and are expected to drop by 30 per cent.

At the top end it is cash – as it is lower down the property pecking order – which remains king. The mortgage drought, fewer lenders and the demand for big deposits which are hampering sales, generally pose no problems for the super wealthy. They can afford to sit out the bad times. Their properties might tumble in value but they don’t have to worry about repossessions or Northern Rock or a squadron of bailiffs hammering on their door.