City job losses will hit London property prices, thinktank warns | Business | The Guardian

City job losses will hit London property prices, thinktank warns | Business | The Guardian

City job losses and decreasing bonuses will put extra pressure on a "stagnant" London property market, experts warn.

House prices in the capital have outperformed the rest of the country over recent years after being buoyed by City earnings, overseas buyers and a limited supply of housing. However, with the London's financial district predicted to shed jobs for the second consecutive year and bonuses also projected to fall, even optimistic property analysts are pencilling in almost no growth in the city's housing market for 2012.

Shehan Mohamed, a housing economist at thinktank the Centre for Economics and Business Research (CEBR), said: "City traders have tended to put their bonuses into property, either as an investment or via residential. There is now a dual effect. Bonuses are falling and jobs are going. Obviously job losses are more powerful as they put people in an untenable situation. Bonuses tended to be used as a down payment. Less bonuses mean less potential new buyers bidding up each property."