Is London Property Recession Proof?

The prime London property market bounced back from the 2008 financial crisis incredibly quickly, outperforming nearly every other asset class. This has led some commentators to suggest that prime London property is “bulletproof” and that you cannot fail to make money.

This is complete nonsense. Now it may seem odd to hear that coming from someone who advises clients on their property purchases, but it’s true. No asset in the history of the planet goes up in a straight line, whether that asset be property, gold, internet stocks, or even tulips (if you have not heard of Tulipmania – the Dutch “internet bubble” of 1637 – or are interested in investor psychology, you should read J.K. Galbraith’s excellent book, “Extraordinary Popular Delusions and the Madness of Crowds”).

You will read arguments from “the bulls” who maintain that London property is a safe haven and that it will be insulated from price drops because of a lack of supply, limited opportunity for new developments due to planning restrictions, and the fact that it’s the most cosmopolitan and international market (in 2011, buyers from 65 different countries acquired property in London).

Meanwhile “the bears” will point to historically high prices, the price to earnings ratios, and the temporary effects of interest rates and currency movements.

Both sides have valid arguments. Unfortunately the arguments cannot take into account your personal situation. You may be overly exposed to stock markets and underweight in property. You may want to “park” money in an asset. Alternatively you may just need a home!

My advice to you is to consider the role of the property within your overall portfolio even if it will be your main home. It’s extremely unwise to allocate too much of your wealth to any one asset, even prime London property or gold. At some stage they will invariably fall out of favour. You need to ensure that you’re never a forced seller in such times.

Of course families that have accumulated and kept wealth for generations have huge property holdings. This is because over time property is a great hedge against inflation and therefore a much better store of wealth over the long term than cash. Consequently some refer to property as a legacy investment. However, the families that have maintained their wealth for generations use it as one part of a diversified portfolio.

The key is not to be over exposed or overleveraged as there may be times when property massively underperforms. As I have mentioned, many people lost money in the recent crashes, i.e. 1972, 1990 and 2008 (do you notice a pattern here?). This is because they were not able to stay in the market during these periods. In some cases they were overgeared, in other cases they were totally exposed to property assuming that it was a one way bet. If their cashflow was poor they then became forced sellers in a weak market. The most unfortunate examples of this recently can be seen in America and Ireland, where multi-millionaires suddenly found themselves insolvent.

Now I know that these are different to the Prime Central London market. However, hubris is a major danger. There are always “unknown unknowns”, so do not concentrate your wealth entirely in London property unless you’re aware of the risks you’re taking.

To discover more:

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Here is just some of what the book includes:

  • The crucial thing you need to get right about your finances, and why having the funds to purchase the property is not always enough to close the deal
  • How to avoid a simple mistake that could see you offering more money than another buyer — and still not have your bid accepted
  • A little-known strategy that uses an estate agent’s sales targets to acquire your ideal home
  • Why buying a property with a short lease can actually be an astute investment, but only when you understand the real meaning of buying leasehold property
  • The 13-point checklist that quickly puts you in a powerful negotiating position by extracting crucial information from the most reticent of estate agents
  • How to use other agents to find the true value of any property you are interested in. This strategy is never even considered by most buyers, but it puts you at a distinct advantage and can save you hundreds of thousands (or millions) of pounds on the purchase price
  • The nine fundamental questions you must ask the seller to give you a sound basis for negotiation, and discover how likely it is the transaction will be completed successfully
  • The secret to achieving flexibility on price without getting into arguments with the seller or the estate agent, or trying to “bully” anyone. (This tip alone can be worth hundreds of thousands – or even millions – of pounds to you)
  • How to motivate a seller to choose you as the preferred buyer by understanding price is often not the most important factor in a property transaction
  • The right way to increase the amount you are willing to pay when the seller rejects your offer. There’s a right way and a wrong way to do this, and the one you choose will have a huge effect on the final outcome of the negotiations

And many more strategies you can put to use to gain a tremendous advantage when it comes to acquiring your central London home.

Of course, such an in-depth guide to acquiring a central London property is not for everyone. These strategies are applicable only for those dedicated to acquiring the most prestigious homes on excellent terms.

However, if you are absolutely serious about acquiring your central London home on the best terms possible, you can reserve a copy of my book simply by entering your details in the box below. Please note, this is a physical book which I will send to you in the post, so please supply the best address to receive the package.

Yours for a successful home acquisition,


Jeremy McGivern
Mercury Homesearch

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