As London property prices fall, social mood is providing more fuel.
A character in the cult British comic magazine Viz, Farmer Palmer is a paranoid, money-grabbing farmer whose catch phrase is “Get off my land!” (or, since he had a rural accent, for Viz purists, “Get orf moi laaaand!”). He uses his double-barreled shotgun to berate innocent members of the public for encroaching on his property. The spirit of Farmer Palmer now abides in the British government.
At its recent conference, the ruling Conservative party unveiled a new policy aimed at deterring foreign investors in the United Kingdom (U.K.) property market. An additional tax of between 1% and 3% will be levied on foreign buyers in an attempt to stop them bidding up prices and, in the government’s view, making housing unaffordable for average British people. Ostensibly a political act aimed at helping homelessness, the policy is a reflection of an increasingly negative social mood of nationalism and insularity — a trend that is growing across the globe.
The Tories didn’t say as much but the new policy is probably also aimed at driving out foreign property owners in London’s prime market. Over the past couple of decades, the labels of “Londonistan” or “Londongrad” have been used to describe a market heavily owned by Russians and Eastern Europeans, as well as Gulf Arabs. Russia, of course, is now persona non grata and oligarchs are fleeing the capital (the Chelsea football club owner Roman Abramovich being the latest).
As ever, the government legislation is late because London property prices have been declining since 2017. However, the negative trend in social mood is still in its early stages. As the new age of economic nationalism gains momentum, assets that have been inflated during the age of globalization are at risk of a severe deflation as money returns home.