The recent turbulence on the stock market will reach out and affect markets in different ways. It is likely that City personnel will see their annual bonuses cut by as much as 20% this year as a result of the falls in the financial markets. It will mean an end to seven-figure handouts after four years of investment banking boom, and will undoubtedly result in a fall for demand in the top-end housing market.
Between November last year and March this year a record £8.8bn was paid out in City bonuses, but this will surely be hit. Predictions are that bankers working in the credit derivative, prime brokerage and other key, but risky, areas will be worst affected.
Evidence is growing that the escalating prices of houses in London are forcing Londoners out of their own city. Council leaders have called on government ministers to get a grip of London’s housing crisis. London Councils, representing local authorities, have made a submission to the Treasury, saying that a cash injection of £1.6bn is needed urgently to address housing shortages and the affordability of homes. A recent report showed that more than 20,000 Londoners are leaving the capital every month. In 2006 243,000 residents left London for other regions of the country. The submission also warned of a crisis coming which would cause a divide between those who could and those who could not afford property. Cheaper homes, it said, are needed to keep the economy in the capital thriving.
A report earlier in the year by London Development Research showed that in 2006 67% of new homes in the capital were bought by investors. This has led to calls for tax changes.
Despite the number of Britons leaving London, figures from the Office of National Statistics, show the capital’s overall population actually went up – by 56,000, pushing the total to 7,512,370. Migration from overseas – which added 69,000 to the total last year – was the main cause,as well as a rising birth rate and a lower death rate.
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