Wednesday, 27 June 2012
London’s top properties head for price plateau
First the arithmetics seem strange: an increase from 5 to 7% on a £3m house is 60k. It may be the gross earnings of a middle class household for a whole year, but if the property will appreciate (according to the trend) not by 50% but by 30% in 2 years, that's a capital gain of almost £1m. Even a Hollande tax of 75% of that is a nice gain of alost a quarter of a million. Hard to see how is the stamp duty a deterrent and could bring the price growth to a halt. The house appreciation for the holding period would need to be as small as 4% to compensate for the "massive increase" in stamp duty. Pathetic!
Secondly the money inflow is speculative and the billions can of course go either way. The hot money have little to do w fundemantals, eg yield, though a multi millionaire could in fact diversify into prime property at its will and portfolio profile.
This exuberance has to do w boe's printing press that devalued the pound, tax evasion in peripheral europe, must-have asset hoarding from middle eastern, asian or russsian plutocracy, than w the cold-headed safe heaven type of investment that is suggested.
The tragic outcome is nevertheless that the hard working, tax paying Londoners are kicked out from their boroughs by the ripple effect of these multi-billions bombs which keep on falling under the benevolent but idiotic stare of the government. They need to force through planning laws that allow rapid developments of hundred of thousands of decent dwellings for the middle classes. Thus the ripple effect would be killed in SW5 and SW6 and not tens of miles away from the posh postcodes (to whom they proudly belong anyway). Shame on you government!