Bankers' Bonuses Boosts Property Prices

By BethPH Last edited 101 months ago
Bankers' Bonuses Boosts Property Prices

glasses.jpg As if being held responsible for the downfall of the British economy and tube fare rises wasn't enough, London's bankers are being blamed for increasing property prices in the capital, according to a survey by estate agent Knight Frank. Don't panic just yet though, it's the higher end of the market where prices are being bumped up by the impending bonus season, so anything under a cool £10m and you should be OK. We think bricks and mortar are still a better investment than champagne and cocaine. Photo by Donnr MB

Last Updated 30 November 2009

Tom Williams

While your instincts may be correct on Cocaine, which has been a terrible long-term investment*. Champagne might have done quite nicely for you: the Liv-ex 100 Fine Wine Index is up over 240% over the last 5 years.

These price movements elegantly illustrate the problems of inflexible supply. Plenty of people around the world are able to grow/manufacture cocaine, despite it's illegal nature. Conversely, the restricted supply of both fine wines and top-end London property cannot respond to surging demand, hence the rocketing prices.

*more up-to-date data from 2005 indicates US street prices still around $100 a gram, with UK prices a shade lower