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Bankers bought fewer luxury London homes in past 4 mths

(LONDON) Bankers and money managers purchased fewer luxury homes in central London in the past four months as turmoil in the credit markets escalated, real estate broker Savills plc said.

Purchases of homes costing £2 million (S$6 million) to £4 million by financial services employees declined almost 26 per cent between August and last week, London-based Savills said in a report on Tuesday.

‘We’re going to see a similar picture for at least another six months,’ said Lucian Cook, a director of Savills’ residential research department. ‘There’s a reasonable likelihood’ that the slowdown will deteriorate, he added.

Sales are slowing as bank losses incurred from US$40 billion in writedowns on US mortgage investments have heightened concerns about job cuts and lower annual bonuses. Bonus-earners in London’s financial services industry accounted for more than half the sales of homes this year in this segment of the ‘prime’ central London residential market, Savills estimated.

Since the end of July, the proportion of purchasers employed in finance or business services declined to 44 per cent for the 27 properties in this price bracket sold by Savills. In the first seven months of the year, 60 per cent of the 60 properties Savills agents sold were to bonus-earners.

Companies in the City of London, the British capital’s main financial hub, may cut 6,500 jobs and reduce bonuses by 16 per cent this year, the Centre for Economic and Business Research said last month.

For the past two years, most of the bonus money has been spent on real estate, fuelling demand for homes in neighbourhoods like Chelsea, Kensington and Notting Hill. Prices climbed by about 34 per cent in October from a year earlier.

 

Source: Bloomberg (Business Times 22 Nov 07)

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