Drastic Change in London Housing Prices

House prices dived by 2.7% during August, figures showed.

The average cost of a home dropped to £211,410 during the month, driven down by a 5.1% fall in the value of flats and a 3% slide in the cost of terrace houses, according to Communities and Local Government.

Across all buyers, a total of just 42,200 mortgages worth £6 billion were advanced for house purchase during August, both new record lows.

Gross lending for the month, which includes all types of mortgages, totalled £19.7 billion, a 20% fall compared with July’s figure and 42% below the sum advanced in August 2007. It was also the lowest monthly level since February 2005.

The Royal Institution of Chartered Surveyors said its members had sold an average of just 11.5 homes during the three months to the end of September, the lowest level since its survey first began in 1978.

The situation is even more severe in London where estate agents have made an average of just eight sales during the period.

At the same time, the number of surveyors reporting house price falls during September also increased for the first time since April.

Overall, 84.2% more chartered surveyors reported seeing further price slides during the month compared with those who saw price rises, up on the figure of 81.8% more who reported falls in August.

Figures from CLG showed that house prices lost 3.4% of their value during the year to the end of August, after the annual rate of house price inflation fell for the 10th month in a row. The fall is far less severe than the drop of 12.4% recorded by both Halifax and Nationwide for the year to the end of September, but the CLG figures tend to lag other indexes, and further steep falls are expected in the months ahead.

As a result, estate agents Kinleigh Folkard & Hayward predict the number of property transactions will be halved this year, down from 1.2 million sales recorded by the Land Registry for 2007.

Kinleigh’s own exchange results for September 2008 revealed the average selling price in London was more than 14 per cent less than the average asking price.

This is despite having already fallen 10% over the last year.

Kinleigh predicts that property values will fall by a further 4 to 5 per cent by early next year, with little movement in values expected throughout 2009 and 2010.

Watts added: “People will always need to move, and as we progress into 2009, I predict we will see a change in the supply:demand ratio for property, and albeit slowly, with increasing levels of activity and transactions as the year progresses.

“In 2009, I suggest that we will see a 15 per cent increase in UK sales transactions compared with 2008.

“Based on my forecast that there will be 600,000 sales transactions in 2008, this reflects a total of 690,000 transactions in 2009 – still 44 per cent less than in 2007.”

The UK average house price fell by 3.4 per cent in the year to August 2008, down from a fall of 0.3 per cent in the year to July 2008. Between July and August there was a fall of 2.7 per cent in the prices index of properties bought compared with a rise of 0.5 per cent over the same period last year, resulting in a decrease in the annual rate. The fall in UK prices between July and August 2008 can be attributed to decreases in average prices for flats (5.1 per cent), terraced houses (3.0 per cent), bungalows (2.2 per cent), semi-detached houses (1.8 per cent) and detached houses (1.6 per cent)…

The latest UK house price index statistics produced by Communities and Local Government were released on Tuesday 14 October 2008. The latest statistics release includes data based on mortgage completions during the month of August 2008.

The key points from the release are:

UK house prices were 3.4 per cent lower than in August 2007.
The mix-adjusted average house price in the UK stood at £211,410 in August 2008 (not seasonally adjusted).
UK house prices fell by 2.4 per cent in the quarter ending August 2008. This compares with a fall of 0.2 per cent for the quarter ending May 2008.
Annual average house prices increased in Scotland (+1.3 per cent), but fell in England (-3.4 per cent), Wales (-4.3 per cent) and Northern Ireland (-18.6 per cent).
Annual average house prices paid by first time buyers in August 2008 were 4.5 per cent lower than a year ago. By comparison average house prices paid by former owner occupiers were 3.1 per cent lower.

Annual house prices fell in all countries of the UK except Scotland in the year to August 2008. In Scotland annual house price growth was 1.3 per cent in August. In England annual growth in house prices was -3.4 per cent in August; In Wales annual house price growth was -4.3 per cent in August; In Northern Ireland annual growth in house prices was -18.6 per cent in August.

House price annual rates of change fell in all nine of the English regions.

The highest annual house price growth was in Yorkshire and the Humber (-2.4 percent) followed by the North West (-2.6 per cent), and the North East (-2.9 per cent). Annual house price growth was lower in the South East (-3.0 per cent) and in the East and the West Midlands (-3.4 per cent each). The lowest annual house price growth was seen in London and the South West (-3.6 per cent each), and the East Midlands (-5.2 per cent).

Mix-adjusted average house prices in August 2008 were £218,281 in England, £159,734 in Wales, £164,307 in Scotland and £205,149 in Northern Ireland.

The English region with the highest average house price in August remains London at £326,908. The lowest average price was in the North East at £144,913.

Of the English regions, only the East, London, South East and the South West had average prices above the UK average.

The UK annual growth in house prices for first time buyers fell from -1.6 per cent in July to -4.5 per cent in August. There was a decrease of 5.8 per cent between July and August in the price of properties bought by first time buyers compared with a smaller fall of 0.2 per cent last year resulting in a decrease in the annual rate.

The annual house price growth rate for former owner occupiers fell from 0.1 per cent in July to -3.1 per cent in August. The prices index between July and August for properties bought by former owner occupiers fell by 2.5 per cent whereas there was a rise of 0.8 per cent at the same time last year resulting in a decrease in the annual rate.
The average price paid by first time buyers across the whole of the UK was £155,409 in August, while the average price paid by former owner occupiers was £244,641.

Massive Drop in London House prices

LONDON — Estate agents are selling less than one property a week as a lack of mortgage finance hits the number of people moving house, fuelling plummeting prices, a surveyors’ body said on Tuesday.

The Royal Institution of Chartered Surveyors (RICS) said its members sold an average of 11.5 homes during the three months to the end of September — the lowest level since its surveys began in 1978. Last month, the figure was 12.7.

Surveyors are hopeful the situation will pick up after Prime Minister Gordon Brown unveiled a bank nationalisation programme on Monday, saying that as part of it, he expected banks to restore customer lending to 2007 levels.

RICS spokesman Jeremy Leaf said the announcement “raises the possibility that the lack of mortgage finance that has so damaged the housing market might be eased” after the recent turmoil.

“The housing market continues to hold its breath and unless mortgage liquidity improves, the market is likely to remain a dormant beast for some time to come,” he added.

New mortgage lending fell 95 percent in August to 143 million pounds according to the Bank of England — the lowest level since records began.

Meanwhile, house prices slumped 12.4 percent in September compared with the same time last year, the sharpest fall in 25 years, home loans provider Halifax said this month.

The RCIS’s findings are based on a survey of 300 member firms.

 

One flat in Folkestone, Kent, went on the market on January 28 this year at £125,000, and has now been reduced to £75,000.

The one bedroom lower ground floor property lies in an upmarket area of the coastal town, and is in need of refurbishment.

When Sky News Online posed as cash buyers, the estate agent Fell Reynolds confirmed the flat had been slashed from £125,000 to £99,950 and then to £75,000 because of the housing slump.

“We felt that because of the lack of interest and the market conditions, £75,000 would be a realistic price,” the agent added. “It’s a nice little flat in a good area.”

Other properties in the UK have fallen even more sharply, according to Propertysnake, a website which measures price reductions.

One two bedroom house near Worthing, West Sussex, was first advertised last October at £319,950 – but is now down a staggering 53% to £149,995.

 

 

A similar home in Cardiff, Wales, has been slashed by 45% from £184,950 to £100,000 in less than a year.

The news comes as new figures out this morning show estate agents are selling only one house a week.

The Royal Institution of Chartered Surveyors (RICS) said its members sold an average of just 11.5 homes during the three months to the end of September – the lowest level since its survey first began in 1978.

The situation is even worse in London, where estate agents have made an average of just eight sales during the period.

Some London homes on the market are down 20% from original asking prices, taking them back to levels seen in 2005 and 2006.

And completion prices are even lower because of ‘gazundering’ in the capital, where buyers cut their offer at the last minute.

A five-bedroom house in Herne Hill has been cut by 37% from £1,275,000 to £795,000 as the number of homes sold in London falls to its lowest level since records began 30 years ago.

One London agent said: “We’re 20% down. There are some very, very keen sellers out there.”

In other figures out today, the number of first-time buyers getting on to the property ladder slumped to a record low during August.

An RICS spokesman said he hoped this week’s bail-out of three high street banks would help the housing market and restore buyer confidence.

Owning Property in London

Key property deals in the City of London are falling through as funding dries up due to the worldwide credit crunch.Sellers are struggling to complete deals as liquidity in the banking sector has virtually dried up. Values are also falling.

German fund manager SEB has pulled out of buying ING Real Estate’s 88 Wood Street development. It had agreed to buy the scheme last month for around £180 million but has been unable to secure the necessary funding in the current poor economic climate.

It is the second time a sale has fallen through on the building. Atlantic Property Partners had offered £190 million but that deal also fell through.The 17 floor iconic building, designed by leading architect Lord Rogers, was bought by ING for over £230 million in 2006.

Do cheer up. There is no such thing as all bad news. Every cloud has a silver lining. Most Britons are still in work and a third of them are on secure state incomes. In the words of Rudy Giuliani, the New York mayor, after 9/11, take the kids to the park, buy a pizza, see a show.

Nor is that all. Some good things are happening. The price of oil has tumbled 40% since July. House prices are down 13% from last year. Whatever the papers imply, this is good news far more than it is bad. Those with strong nerves and some money can even buy shares that are unbelievably cheap.

Restaurants are emptying, air travel is easing and I noticed last week that central London traffic jams were strangely diminished. Soon hotels will be discounting heavily and plumbers will not cost an arm and a leg.

that the best things in life are free.

The collapse of the buy-to-let market should lead to rents plummeting and people spending realistically on housing. The end of the home-ownership boom should encourage existing owners to sublet and reduce the underoccupancy that has long inflated British house prices. This is a good thing for all.

The impact of recession on government should be even more benign. Only now do we see how casually the rampant growth in revenue has led ministers to behave. There should be no more extravagant pay settlements for doctors; no more thoughtless purchase of NHS and ID-card computers; no more of the £70 billion that Labour has spent on “advice” . The death of spurious consultancy and the reassertion of civil service morale should be another gain of the recession.

 

 

 

 

 

 

 

TAX

A businessman whose family owns more than half a dozen houses, including a £50m mansion on Britain’s “Billionaires’ Row”, has disclosed how to avoid paying tax on multi-million-pound property deals.

Hossein Ghandehari bought Toprak Mansion on The Bishops Avenue in north London with his 75-year-old mother Hourieh Peramam and his wife Yassmin this year.

Ghandehari, a 43-year-old Iranian-born businessman whose family is said to be worth £1 billion, mainly from property, said transactions involving vast sums were being kept hidden from official records using legal methods.

“There are many, many ways in which what is registered on the Land Registry is different from what you end up paying,” he said.

The price declared to the tax office, and then recorded by the Land Registry, is used to calculate stamp duty. The top rate is 4%, implying a saving of £40,000 for every £1m lopped off the declared price.

Ghandehari said one method was a process known to property dealers as “flipping”, in which a buyer sells on a house before he is due to complete his own deal. He said: “One of the ways these things happen, and I’m not saying this is the case of what happened here [with Toprak], is you buy a property for £4m and [if] I am an offshore company, I buy it for £4m with a six-month completion, and then some other company comes along and I flip it for £6m.

“What the [tax office] ends up receiving is . . . the tax on £4m. But that ‘upside’ is just not there, the £2m. And that could go on indefinitely, it could go up to £20m, £50m if the market justifies it.”

Ghandehari insisted such dealings were “all legal”. He said: “The fact is you sell the company which owns the property, or you flip it and they all complete at a certain date.

“You just buy the company which owns it . . . everything takes place offshore, nothing takes place here, no tax, no nothing, so the property becomes the asset of that offshore company.”

Ghandehari, his wife and his mother are all tax registered outside the UK. He and his wife live at Toprak Mansion when they are in Britain, while other members of his family live permanently here, some of them in The Bishops Avenue.

Land Registry records state that the mansion, a neo-classical 30,000 sq ft building, was bought for just under £41m in January by an offshore company controlled by Peramam.

Ghandehari said his family actually paid nearly £9m more for the house, which was named after Halis Toprak, the Turkish businessman who built it, but has now been renamed Royal Mansion.

Other rich homeowners in the street include the steel magnate Lakshmi Mittal and members of the Saudi royal family.

Ghandehari, who said he first bought a house in the Hampstead street six years ago because he felt it was an “excellent place to live”, said his family intended to buy more houses there. “Once my mum said we should buy the entire Bishops Avenue, should it become available. If we have the money and they are good properties, yes we are buying.”

However, he said the poor state of the market meant purchases would be put on hold.

Ghandehari said he had recently been offered £80m by a Russian oligarch for Royal Mansion but refused to sell because he loved the house. “He managed to see it for about 10 minutes and [the agent] said, ‘What price would tempt you?’ and I said £100m, but I didn’t mean it, and he came back and said, ‘£80m and he wants to buy it there and then’, and I said no.”

There was gossip when the purchase of Toprak was announced in January, with some questioning how Peramam, who fled her native Kazakhstan at the age of 17, accumulated such wealth.

A Kazakh exile said the country’s president, Nursultan Nazarbayev, was indirectly involved in the purchase of Toprak Mansion. Ghandehari denied this, although he said he knew Nazarbayev’s family.

The Ghandeharis’ spending began in July 2002 when, according to the Land Registry, Ghandehari paid £4.2m for No 33.

In 2006 the family bought two neighbouring plots that became Wyldewood, where they lived until last year. The offshore firm that now owns Wyldewood is run by Yassmin Ghandehari.

Last November, £4.9m was paid for No 24, by another offshore trust also run by Yassmin. At the same time a plot of land behind No 31 was bought for about £900,000.

In January, a third offshore firm bought Toprak. Mortgage documents show the company is run by Peramam. Ghandehari said his family also owned a few more houses in the road.

Tax rates

Buying property costing more than £500,000 incurs a stamp duty of 4%, but if the property is owned by a company, anyone buying the firm pays duty on only 0.5% of the purchase price and then owns the property. Offshore companies are exempt from stamp duty entirely

 

Mortage Customers Relief After Repayment Cost Fell From 4-5%

          Mortgage customers breathed a sigh of relief today as the cost of their repayments fell following the Bank of England’s decision to cut interest rates from five to four-and-a-half per cent.

The news came as a pleasant surprise to UK property owners, many of whom weren’t expecting a decision until tomorrow.

The Bank Of England said in a statement: “Although inflation was likely to rise above five per cent in the coming months, it will then drop back towards the 2% target. Some easing of global monetary conditions is therefore warranted.”

The Bank admitted that money markets had “deteriorated very markedly” over the last few weeks, and that lending for homeowners was hard to come by.

The decisions means that hundreds of thousands of homeowners on tracker mortgages will experience falls in their repayments. A London property owner with a typical £200,000 mortgage will see their monthly repayments reduce by £60. 

A woman from afghanistan is receiving more than £12,000 a month in housing benefits so she and her children can live in a seven-bedroom house in west London. She approached Ealing Council in July when she and her children became homeless. They were placed in a privately-owned seven-bedroom house off Horn Lane, Acton, as the council had no properties that size. The authority said it has a legal obligation to help them.

London Housing Prices Continues To Drop

Hidden among the national figures for house prices, which are showing falls of around 12% over the past year, there are huge regional differences.

With volumes low the sale of a few expensive properties at knock-down prices can seriously distort the figures.

In the last housing slump of the early 90s anyone who didn’t have to sell just sat tight – and that appears to be what is happening now, particularly in the London market, which acts as a barometer for the rest of the country.

But buyers are quick to sense opportunities as they feel that the bottom end of the market may have bottomed out.

Average London house prices have decreased by 15% so far this year compared with Nationwide’s national figure of 12%. But buyers are on the lookout for bargains and the number of potential buyers registering with estate agents has risen by 7% – in just one week – while the number of first time buyers has gone up too.

London house price drops are now stabilising, decreasing by only 0.10% in September, taking the average price to £247,271, down from £247,524 in August. ‘Prices have fallen 15% since January 2008 and may now have reached the bottom of the market. September started to show the first encouraging signs of green shoots, with a surge of buyers registering in order to take advantage of the more affordable prices and more attractive mortgage deals that lenders were offering,Despite the collapse of Lehman Brothers and Bradford & Bingley, the level of registered buyers in London actually jumped 7% the following week. The lower end of the market has felt less of the knock-on effects brought about by the recent financial turmoil and, in some areas, asking prices were met or even exceeded.’

There is also evidence that the amount of new rentals coming on the market may have peaked and analysts believe that prime central London rents should plateau and possibly rise in 2009.

The report from Knight Frank says that rents fell by 1.8% during the third quarter of the year. This fall outpaces the decline seen in the second quarter, when rents dropped by 0.5%, but rents are now 1.7% higher than a year ago.

Rents are also falling in outer London with prime property also falling by 1.8% over the last quarter, the report found.

Capital values are falling more rapidly than rents, consequently yields in central London are continuing to rise, now standing at 4.2%, compared to 3.9% a year ago.

Not all of the capital has been equally affected. Rents for houses in the most exclusive central areas have remained static over the past six months, a result of both scarcity and the demand from very highly paid financial specialists drafted in from overseas to manage the crisis in the City.However, the main cause of the falls in most markets is the number of forced landlords who have opted to rent out their primary residence – either because they cannot sell at the price they deem appropriate, or are waiting for the market to turn.

As a consequence, the quality and quantity of rental stock has noticeably increased over the past few months, increasing the choice for tenants and driving down rents. They have been joined by a number of developers who are choosing to let out their unsold properties.

However the unprecedented level of supply partly obscures the fact that tenant demand is also at historically high levels. The rental market is offering an ideal place for potential buyers who are deterred by falling prices in the sales market or difficulties with obtaining mortgages. Owning a property purely for rental income rather than house growth will become far more viable.

 

Fall of investment in British Buyers

It is a dream of thousands of Brits – to buy a second home in a picturesque spot in France and wile away hot summers converting a dilapidated barn into the perfect home in the sun.

But there are signs that many are abandoning their plans to buy a plot over the Channel as the economic downturn hits the second home market. And the situation has become so bad that some second home-owners wanting to sell up in France have had their properties on the market for as long as three years, according to agents. Experts say the overseas property market could be down by as much as 40 per cent on last year.

A popular trade show has also moved its flagship London event because of fears that the slump in the market would make for dismal visitor numbers.

Brits spent about £24bn on overseas property last year but that is expected to see a big fall this year.John Wall, who set up his estate agency after moving to France and falling in love with the Pyrénées-Orientales region, has noticed the fall in British buyers. “There is no question that the market has slowed,” he said. “Anyone still looking to buy is being far more selective and looking for a good price, which means that anyone putting a property up for an unrealistic price has a much poorer chance of selling.”

The property exhibition A Place in the Sun Live was due to take place last weekend at London’s ExCel centre but was withdrawn as those behind the event feared it would not attract enough visitors. A similar show was held in Birmingham last month and the fear was that demand was too low in the current climate to warrant another one so soon. “Developers were keen to attend but we were worried about visitor numbers,” said an organiser.

So instead of France, some investors are now looking further afield to secure a bargain. Places previously considered too politically volatile or far away are starting to attract British buyers. Thailand, Bulgaria and Venezuela are some of the destinations seeing increased interest from Brits. “Opportunities to make capital gains in so-called ‘emerging markets’ has accelerated this phenomenon,” said Mr Bishop. “Countries such as Turkey, Cape Verde and Cyprus are growing in popularity among buyers wanting some personal use of holiday properties, while pure investors are purchasing increasingly in the EU accession states, the Caribbean and elsewhere.”

According to Mike Holwill, of the estate agent Someplace Else, investors previously put off by South America are now deciding to take a risk on the region. “Brazil and Argentina were seen as too risky in the past, but their lack of reliance on liquidity has meant they have largely escaped the ill effects of the credit crunch,” he said.

Bargain in Bulgaria A home for £100,000

Bulgaria may not have been top of the list for second homes over the years, and the European Commission’s concerns over rampant corruption in the country cannot have inspired confidence among would-be investors. But it is one of the locations benefiting as investors begin to search out emerging property markets as the potential for making a profit in more traditional markets evaporates. A miserly £116,000 would buy you a three-bedroom villa on the Black Sea Coast, complete with open-plan kitchen, a large garden and three bathrooms. It may not be in the land of wine and cheese, but it is just down the road from Varna, a seaside resort and one of Europe’s oldest cities.

German investors have been popular among UK property owners looking for a quick sale, but the country’s own real estate sector will not be immune for the Europe-wide slowdown.

German banks are among the only institutions in Europe still willing to finance real estate deals, and the country’s cash-rich open-ended funds dominate global property investment.

The biggest economy in Europe, Germany’s dominant export performance recorded solid growth in gross domestic product in 2007, keeping up the momentum in the first quarter of 2008.

However, the economy performed poorly in the second quarter, contracting by 0.5 per cent.

The commercial property market mirrors the gloom. Research compiled by property consultancy DTZ shows that investment transactions in the first half of 2008 totalled €12.1bn – a 55 per cent fall on the previous year – as the crunch keeps debt-driven UK and US buyers away.

As in London, falling transaction levels are quickly translating into lower asset values. DTZ believes yields on German office properties have moved out from their historic low of 3.5 per cent in 2007 to an average of 4.65 per cent today, and are likely to SOFTEN further.

Despite the worsening property outlook, German bank lenders have risen to increased prominence in a market starved of credit.

As well as the big three – Eurohypo, HSH, and Hypo Real – the regional banks, or Landesbanken , are muscling in on the action on the strength of their covered bond method of lending.

Known as the Pfandbrief , the method of repackaging property loans and selling them on to institutional buyers is more highly regulated and requires less leverage than the similar commercial mortgage backed securities (CMBS) model, which has suffered death by credit crunch.

Crucially, this gives German banks liquidity that their European counterparts cannot match. And the result? While few CMBS transactions have been executed, Eurohypo research shows that in the past 12 months, €58.5bn of Pfandbrief loans were issued.

Across the world, the German open-ended funds remain one of the few active operators in the real estate investment market that have the cash and the nerve to execute transactions.

In London, the German fund DEKA recently finalised its £230m purchase of Moorhouse, a City office building, representing a yield of 6.4 per cent. This has come as a shock for a market used to seeing transactions graze the 4 per cent mark little over a year ago.

This is quite a turnround from 2006, when, following a series of corruption and valuation scandals, the open-ended funds engaged in the mass-selling of property assets, as investors withdrew their money.

However, the profits generated by selling assets near the top of the market attracted investors back in, and the cycle appears to have turned in their favour.

“The German funds have always liked London because of the long leases with upward-only rent reviews, and the fact that the tenant is liable for the upkeep of the building,” Mr Farquhar says.

“Provided that it is a core asset that ticks all those boxes, the thought of falling values is not stopping them from buying now.”

The ambitions of the open-ended funds are not limited to London.

CB Richard Ellis research estimates that the funds collectively have €22bn to spend on property. The Asia Pacific region is a big target for many, including RREEF, which is targeting investments in China and Malaysia, and Union, which has already invested in Japan, Singapore and South Korea.

However, ironically, actual German investment vehicles are struggling. Real estate funds listed on London’s Alternative Investment Market have performed particularly badly because of their often high levels of gearing

“When these funds floated, high debt levels were considered desirable in order to drive high equity returns,” says Mark Young, real estate analyst at Oriel Securities.

“However, these high levels of indebtedness are now a cause for concern, leading to severe de-ratings in recent months.”

Develica Deutschland, a German commercial property investment fund is the biggest faller to date. It is 286 per cent geared, and has lost 82 per cent of its value in a year.

A separate Aim fund, Deutsche Land, only became fully invested in December 2007, meaning that much of its investment portfolio of 54 commercial assets was acquired at the top of the market.

Activist investors have been sniffing around the sector because of the deep discounts to net asset value, but now the powerhouse is slowing, German real estate is less of a tasty prospect.

 

 

The market for the most expensive homes in London is expanding despite the economic crisis, research for the Standard has found.

Sales at £10 million and more have increased, with the number of transactions up by a third in the year to last month. Virtually all the buyers at this price at present are foreign, with the Middle East dominating again. The survey, carried out by estate agency Savills, found that the upper end of the London property market now falls into three distinct “leagues”. At the top is the narrow tier of homes selling for £10 million plus. In the larger tier below, prices range from £5 million to £10 million. Here, sales volume is down by a third. This is the section of the market where City staff who have enjoyed big bonuses have been competing with wealthy – but not billionaire – foreigners. Below that is the £1 million to £ 4 million bracket, almost entirely driven for the last few years by City employees on the expectation of their bonuses. In this category, sales have slumped by 45 per cent. In the lower two leagues, much reduced demand has been driving prices down. But in the £10 million-plus “premier league”, prices have actually gone up, by 0.6 per cent since June. “In the traditional areas of Knightsbridge, Mayfair, Chelsea and Belgravia, old money and international demand are keeping prices more stable. “However, only the very top tier – the ultra-prime £10 million plus market – continues to see demand and values holding firm, driven as it is by a growing number of global billionaires.” There are indications the boom at the very top end is slowing. Separate research by estate agency Knight Frank found prices in the top tier dropped 1.7 per cent in this sector last month. It comes as figures show the number of new homes being built has sunk to an all-time low. In the three months to September, 38 per cent more surveyors reported a fall than a rise – the lowest since the Royal Institution of Chartered Surveyors study started in 1994.

Drop in London Property Price

         The price of a home in the tax haven has leapt up an incredible 30 per cent in the last year which puts it ahead of London for the first time in five years.Prices in the capital have risen by less then two per cent as the effects of the economic downturn begin to be felt. This contrasts sharply with the final phase of the UK property boom when property prices rocketed by 50 per cent.Demand in property in monaco is high eventough short of suply, based on YourMonaco.comMonaco, traditionally an oasis for the rich and famous, is home to the world’s most expensive street, Avenue Princess Grace, where a four-bedroom apartment can cost £22 million.However, they predicted that the market would slow as the financial turmoil of the past few months begins to be felt more strongly.

 House prices are tumbling; it’s easier to get blood from a stone than borrow a mortgage at a decent rate; stock markets around the world are on a rollercoaster ride; and inflation is still expected to rise for another month or two yet.

The current economic situation is a nightmare scenario for many of us. But the extent of the impact of the credit crunch on your finances differs dramatically according to how old you are. If you are young, in a reasonably secure job and hoping to buy your first home sometime soon, the current turmoil could actually be a good thing. But if you are close to retirement, have student children who depend on you for funding and still have debts of your own to pay off, it is likely to be a disaster.

This week, we will examine the problems that the credit crisis can cause people in their twenties and thirties. Next week, our experts will tackle the difficulties facing those nearing retirement age, and those who have already stopped working.