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As a possible result to the credit crunch houses in Central London have taken a tumble of 1.5% in the first quarter of 2008. This has been a result of speculation in the City and expectations of new taxes in the Budget to affect non doms.

This whole scenario is affecting the annual growth potential by as much as 22%.

With many employees losing their jobs in the City of London due to the credit crunch issue, buying power and demand for property have been lowered tremendously. The Director of Savills residential research states that: “values aren’t bouncing back as fast as in 1998 and 2001 after dropping one or two quarters.”

In the long run the performance of the sub £5million prime central London housing market depends on the outcome of the credit crunch. At this stage it is still early days. Expected price falls this year are calculated to be around 4%. This is double as much as the 2% in the last quarter of 2007.

Despite this somewhat gloomy outlook, the current market is still strong with a growth of 1.7% in March.

In the end it isn’t all that bad, since the expected trickle or ultra high net worth non doms who are expected to relocate from London (if the expected tax legislation becomes reality), won’t affect the market with sudden housing drops which is normally due to a glut of property on the market. The slow movement will ensure steady but slow growth in the long term.

Despite all this talk there is still an active buyer market from overseas who are only too happy to buy in the Capital.

Another part plays a significant role in this. It is the rarefied commodity of property in the centre of London. This alone paints a steady and promising future.