"Commercial property has fallen by 10-15% as a result of the credit crunch in little more than three months. The Stock market has fallen, with property and housebuilding shares halving from the market peak. Yet central London property had a fabulous year of price rises throughout 2007, and still there is no sign of major price weakness. In a credit crunch you would expect the very inflated central London residential market to fall as well.
There are reasons to worry about these prices:
1. They have become very high in relation to UK earnings. The central district prices rose by as much as 30% last year alone.
2. Mortgage approvals are down 40% this month
3. There are fears of City lay offs and lower bonuses
4. Non doms and overseas visitors are facing the threat of paying more tax, which could persuade some of them to sell up and leave..."
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