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Return of bank bonuses fuels a new surge in house prices
Sri Carmichael, Consumer Affairs Reporter22.10.09
The return of huge bonuses is already pushing up the price of homes - even though City workers have yet to receive their payouts.
Estate agents say prime properties in Notting Hill, Holland Park, Kensington and Chelsea have gone to sealed bids at above the asking price in the past few weeks.
Staff at investment banks, including Goldman Sachs, JP Morgan and Royal Bank of Scotland, are in line for bumper sums after soaring profits. Liam Bailey, head of research at estate agent Knight Frank, said house prices in bankers' enclaves were up eight per cent in the past six months, with the last two months seeing a three per cent leap.
The agency has registered almost double the number of buyers from the financial sector this month as it did in July. The proportion of Square Mile applicants is 38 per cent, up from a low of 24 per cent in February and 30 per cent this time last year - the weeks after Lehman Brothers' collapse.
The company has seen more buyers from Goldman Sachs than any other bank, as the US giant looks likely to hand out £13.5billion in bonuses.
Sealed bids have become commonplace. Nearly 50 potential buyers saw a four-bedroom Regency terrace house in Alexander Street, Notting Hill, over seven days before four bids were put in and an offer "substantially over" the £3.5million asking price was accepted this week. It sold for more than it was worth when prices peaked in 2007.
In nearby Powis Terrace, a three-bedroom house with artist's studio and roof terraces available for a year at £3.5million, eliciting little interest, became the subject of a bidding war last month, driving the final price up to £3.9million. Mr Bailey said: "We've seen the £5million plus market start moving after a year of stagnation. It's the hedge fund and private equity managers and bank executives who can afford those prices. We'll see an even more pronounced recovery in January when the bonuses actually arrive, as in 2005 and 2006."
Ed Mead, director of estate agency Douglas and Gordon, added: "Given how thin the market is, the bonus effect is likely to be more prevalent than ever."
Reader views (4)
Well done Gordon Brown for saving our banks and the economy."
I must say that UI am beginning to agree with yiur sentiments - Paul
- Keith Price, Luton England
This article refers to a very small part of the market that is not really sensetive to mortgage availability and requirements for a large deposit. It is not the wider real world, just a small part that is habited by people who are just "less rich" rather than struggling. Not sure why yu bother reporting it unless not much is happening elsewhere. Nice insight though but a flawed article.
- Steve, essex
Well done Gordon Brown for saving our banks and the economy.
- Paul, Enfield
The report makes it sound like these bonuses are therefore a good thing. They will fuel the next recession and the one after that
- Keith Price, Luton England
