1
Oct
The Ripple Effect
Nick Churton of Mayfair Office offers an
explaination of the "ripple effect" on the property market.
The 'ripple effect’ is an expression
that describes the effect that the London property market has on
the rest of the UK. Historically, what happens in London
eventually radiates into the rest of England, Scotland and Wales.
The areas and counties closest to London are the first to feel the
warmth or chill of change. The extremities of the British
Isles have traditionally felt the dissipated and weakened ripples
somewhat later.
But now we live in a rather different
age. London does not dictate the UK market so much. The
UK has become more homogeneous and more subject to offshore
pressures as globalisation has an increased effect on national
economies. We have seen this from the US recently where the
sub-prime debacle kick-started what many industry insiders believe
is the sharpest UK property market slowdown in the living memory of
most people. This includes the market busts of the
‘70s, ‘80s and ‘90s.
So the ripple effect has less significance
today than it ever did, and London has refined its own market
hierarchy through lifestyle and convenience.
In fact London has never been one
market. London, which covers 627 square miles, has as many
markets as it has towns, villages, postcodes, neighbourhoods,
streets, sides of streets and end of streets. Plus it has
prime, super-prime, extra-super-prime and
so-unbelievably-extra-super-prime that no one can quite fathom why
anyone would pay £100 million for an apartment except its
buyer. In property terms London is divided into the haves,
the have nots, and the Russians, who now seem to have more than
anyone else.
But the current property downturn in the UK is
certainly having a detrimental effect on London’s many
property market sectors. There is hard evidence of price
reductions of up to twenty per cent in some areas, and sales
volumes are down by over fifty per cent. It is only at the
very top of the market, at figures over £10 million, where
matters are not only stable but in some areas confound the market
and are still on the increase.
But the movement of buyers and sellers between
London and its neighbouring counties continues, not as a ripple but
as an ebb and flow. Young professionals often start their
working lives living in London where they have demanding careers
and can be close to their places of work. Later, coupled and
looking to start a family, the benefits of an out-of-town life
begin to have their attractions. So if there is a ripple it
is not so much a commercial one but a human one.
The globalisation of the property market means
the live/work balance is today more crucial than ever before, not
just for Britons but for the many buyers who have business,
lifestyle and diplomatic reasons to move on an international
basis. Now that is a ripple effect!
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