Saturday, November 7, 2009
Property Lust Follows Bust
I mentioned two days ago that I was amazed by the continuing high property prices in central London. Last night I picked up a copy of the London Lite newspaper - a tube station giveaway - and there was a small article in there confirming my suspicions. The paper says "Home prices up 1,300 (pounds) a day" in Chelsea, Kensington and Notting Hill. This is said to be due to an "extraordinary autumn revival fuelled by hopes of bumper City bonuses". Downstairs from my rented flat (in Kensington) is an estate agent - the cheapest flat in the window is a 'light-filled studio" for 425,000 pounds. Not that I was even considering a pied-a-terre in London, but Holy Cow. My son tells me that Paris prices have barely moved during the crisis - up or down. And now with Sarkozy's government cracking down on financial markets' bonuses, they are unlikely to be bidding up property there in a London-like fashion. So, while I am not a great fan of reigning in bonuses, there is a very human element to doing so. If bonuses are not on the 'too big to flinch at ridiculous prices for flats' side then people don't pay ridiculous prices. This keeps the property market accessible to others who simply want to live in a city centre near work. Commuting two hours each way has become almost the norm in London among younger people. Affordable homes are so far away and yet jobs remain in the centre. This is the opposite of urban planning.