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Speaker 1: Hello, Vhotonomics fans. It's Allegra Stratton. I want to tell

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Speaker 1: you about our sister show in the City. It features

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Speaker 1: me with Bloomberg TV host Francine Laqua and our head

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Speaker 1: of Media, David Merritt. The show takes a closer look

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Speaker 1: at specific stories that are driving conversations in financial capitals

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Speaker 1: across the world, and it showcases the brilliant reporting that

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Speaker 1: we have here at Bloomberg. I think you'll enjoy listening

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Speaker 1: to it if you aren't already, So for the next

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Speaker 1: few weeks at least, we're going to bring you the

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Speaker 1: latest episodes in this feed.

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Speaker 2: Bloomberg Audio Studios, Podcasts, Radio News.

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Speaker 1: I'm Francie Laqua, I'm David Merritt, and I'm Alegra Stratton.

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Speaker 3: We're back in the studio. It's back to school week

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Speaker 3: for lots of people, back to school vibes around London.

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Speaker 3: Don't you think it.

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Speaker 2: Feels like back to school? All three of us in

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Speaker 2: the studio.

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Speaker 3: I've just come back from America and the political cycle

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Speaker 3: is heating up. There's a lot of drama and tension,

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Speaker 3: and what caught my eye was this already that Americans

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Speaker 3: are now swarming to London for properties. And I've heard

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Speaker 3: this firsthand actually from friends in the US. People are

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Speaker 3: looking around the world in London really stands out as

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Speaker 3: a place where if all hell were loose in the

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Speaker 3: US for whatever reason, this is increasingly the haven that

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Speaker 3: they're looking at.

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Speaker 1: But people come up to and say, hey, you're you're

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Speaker 1: a Londoner. What's it like.

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Speaker 3: My entirely unscientific survey of New Yorker's residential intentions. I mean,

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Speaker 3: you know that there's a lot of worry in America

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Speaker 3: about the political situation, the social situation. You know, gun

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Speaker 3: crime is a big concern. The drug use on the

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Speaker 3: streets is there for everybody to see. And of course

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Speaker 3: we've got this big election coming up and people have

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Speaker 3: said to me, we're seriously thinking of relocating our families.

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Speaker 3: And then, having heard that, when I read this great

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Speaker 3: story by our very own Damien Shepherd saying that actually

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Speaker 3: the Americans are propping up the luxury end of the

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Speaker 3: housing market. We've actually got the data in that to

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Speaker 3: prove my very unscientific survey.

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Speaker 2: Of New York is there you go, the science behind

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Speaker 2: the hunch. It's Damion Shepherd, and he wrote a piece

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Speaker 2: saying look, US buyers are snapping up some of these

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Speaker 2: pricey digs in London. So on today's show, let's deep

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Speaker 2: dive into what's behind an American rescue of London's battered

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Speaker 2: luxury property market.

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Speaker 4: Welcome to the City of London.

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Speaker 2: The City of the City of London.

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Speaker 5: The.

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Speaker 4: Mind, the gap between the tree and the financial heart

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Speaker 4: of the country, the City, the City.

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Speaker 1: Welcome to in the.

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Speaker 2: City, band, clear of the doors. Damien, Welcome to in

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Speaker 2: the city.

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Speaker 5: Hello. I mean, I go for a lot of coffees

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Speaker 5: with London breakers, and the one thing they need right

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Speaker 5: now is Americans. I don't particularly like using this word,

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Speaker 5: but the top end of the London market is resembling

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Speaker 5: something like a blood bath at the moment. Not the

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Speaker 5: way you have that level of sympathy for the billionaires often,

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Speaker 5: but attrack these transactions that happen fifteen, twenty million, thirty

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Speaker 5: five million, and this year they've just fallen off a cliff.

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Speaker 5: There's a lot of concerns among the ultra rich, which

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Speaker 5: is forcing them to look to other areas like Milan

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Speaker 5: and Dubai. And there's lots of reasons why the Americans

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Speaker 5: are a crucial clientele at the moment for the London broker.

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Speaker 3: So scaring off most buyers at this end. And it

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Speaker 3: is this the nervousness about what might be coming under

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Speaker 3: the new labor government. So you know, with a lot

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Speaker 3: of we don't know any of this to do it yet,

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Speaker 3: but there's a lot of speculation about changes to capital

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Speaker 3: gains tax, who knows, maybe something on stamp duty. There's

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Speaker 3: the non doms situation, which has already shifted from the

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Speaker 3: previous government, but perhaps some more measures there. So high

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Speaker 3: network individuals who used to make London their home, they've

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Speaker 3: been talking about leaving and you're actually seeing that now

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Speaker 3: in the property market.

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Speaker 5: We are. And the thing you mentioned now that's so

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Speaker 5: crucial is non doms. I mean, this is the term

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Speaker 5: that's striking fear through the ultra rich in London at

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Speaker 5: the moment, and that's what is you know, prompting them

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Speaker 5: to look at other destinations like Milan and Dubai. The

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Speaker 5: reason why the Americans aren't quite as susceptible to this

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Speaker 5: is there's big currency discounts at play at the moment

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Speaker 5: in the London market. So there's already big discounts happening

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Speaker 5: when that buyer and seller expectation gap closes. But then

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Speaker 5: when you bring in the strong dollar versus the week pound,

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Speaker 5: this is you know, giving the Americans an incentive to say,

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Speaker 5: you know what, the tax situation doesn't look as great

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Speaker 5: as it did in the past, but I've actually got

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Speaker 5: a bit of a you know, incentive here to make

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Speaker 5: this deal happen. And they're not dallying in the way

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Speaker 5: that other international buyers are. And that's one of the

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Speaker 5: reasons why the breakers are prioritizing the Americans at the moment.

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Speaker 1: So some international buyers looking elsewhere and the Americans stepping

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Speaker 1: in and filling.

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Speaker 5: That gap exactly. I mean, like I said, we're not

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Speaker 5: seeing many deals above the twenty million pound mark, but

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Speaker 5: one recently, for example, was a thirty two million pound

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Speaker 5: deal in notting Hill and the buyer was an American

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Speaker 5: moving his family over to start business here. The same

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Speaker 5: broker told me that roughly a year ago there was

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Speaker 5: an eighteen million pound deal in Kensington of a family

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Speaker 5: that moved over. One of the main reasons was gun

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Speaker 5: crime and concerns about sort of the social and political

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Speaker 5: situation over in the US. So there's lots of lots

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Speaker 5: of factors at play. Here, but it's certainly trendissing.

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Speaker 1: And those properties, the thirty two and then the eighteen million,

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Speaker 1: were they discounted already because the top of the market's

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Speaker 1: not that confident or so were they picking up a

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Speaker 1: bargain and they were moving because of that, or were

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Speaker 1: they happy they paid at the top end.

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Speaker 5: They're picking up a bargain either way because of that

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Speaker 5: currency discounts, if we're calling it a bargain, not my bargain.

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Speaker 2: Two for a price of one. But are these houses

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Speaker 2: that are also almost doubled in price in the last

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Speaker 2: ten years.

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Speaker 5: They are, Yes. So you know, if you look at

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Speaker 5: the long term growth of these mansions, which are often

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Speaker 5: bought as an investment and sometimes left empty for a

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Speaker 5: very long time, their appreciation has been massive over the

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Speaker 5: past twenty years. But but still, you know, everyone, even

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Speaker 5: the ultra rich, they bargain. And this is one of

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Speaker 5: the reasons why despite the fact we're seeing this blood bath,

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Speaker 5: as I possibly regretsively called it earlier, there's still customers.

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Speaker 2: Yeah, six percent of all very high end so that's

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Speaker 2: what more than twenty million or ten million houses are

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Speaker 2: bought by Americans. Yeah, that was the stat last year.

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Speaker 2: I mean it's massive.

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Speaker 5: Why so, I mean, if we take it over to

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Speaker 5: the US, We've spoken lots about the currency discounts at

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Speaker 5: play here. One word which everyone hates at that end

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Speaker 5: of the market is uncertainty. Now the US election is

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Speaker 5: definitely playing a part here. So when Donald Trump was

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Speaker 5: leading in the polls, there was breakers telling me there's

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Speaker 5: people already making plans. There's a nervousness about again that word,

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Speaker 5: the uncertainty of a Donald Trump second presidency. Now we

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Speaker 5: look more in a deadlock between Harris and Trump, but

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Speaker 5: still not knowing which way the election is going to go,

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Speaker 5: is you know, causing nervousness around policy and prompting buyers

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Speaker 5: to look elsewhere. So there's issues around the political spectrum.

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Speaker 5: Gone crime comes into it. I've heard about drug use

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Speaker 5: concerns over in the US, levies on assets. There's plenty

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Speaker 5: of issues at play here, and it's just it's just

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Speaker 5: those little things which are pushing the US buyers more

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Speaker 5: than internationals from elsewhere to make the move.

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Speaker 3: You wonder, don't you, Because of course, a few weeks

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Speaker 3: ago it seemed like Donald Trump was streets ahead, and

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Speaker 3: then the whole race, the political races turned on its head.

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Speaker 3: In a sense, more uncertainty has been brought into the

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Speaker 3: system because now it really is a bit of a

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Speaker 3: coin toss who's going to win. You know, they're in

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Speaker 3: a statistical tie, and so people, I guess A're hedging

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Speaker 3: their bets in their environment and wondering maybe London. You know,

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Speaker 3: we've got pretty boring politics now here, haven't we relatively.

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Speaker 3: I mean we've been throughy you.

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Speaker 2: Well, there's a heart We don't know though, on this

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Speaker 2: new government and what they'll do in that budget October thirty.

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Speaker 3: Ye is that is very true. We don't know what

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Speaker 3: them at well, we know what she's not going to do.

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Speaker 3: We know she's not going to raise income tax, we

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Speaker 3: know she's not going to raise vat unless she really

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Speaker 3: does break up promises. But what's left are increases on

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Speaker 3: the wealthy, aren't they? Presumably that's what everyone is assuming.

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Speaker 3: I could be proved wrong. But how come that isn't

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Speaker 3: factoring into these rich Americans thinking Tamian that well, actually

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Speaker 3: you've got a new government at places UK, very stable

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Speaker 3: as they may be, but they're going to come after

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Speaker 3: my wealth, aren't they.

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Speaker 5: There is definitely nervousness around that. I think you know

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Speaker 5: what we're seeing here is that nervousness for a different

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Speaker 5: international buyer who's not got these incentives currency wise and

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Speaker 5: discount wise, is going to cause them to say, do

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Speaker 5: you know what, No, no to London, I'm going to

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Speaker 5: go to Dubai. I'm going to go to Milan. It's

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Speaker 5: just these extra incentives that are coming through with the Americans,

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Speaker 5: which is allowing them to prop up such a depleted

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Speaker 5: market at the moment. So, I mean, like you said,

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Speaker 5: our politics does appear a lot more boring than the

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Speaker 5: US at the moment, but that October budget is crucial,

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Speaker 5: and if we have this conversation again afterwards, I'm sure

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Speaker 5: there'll be many more factors at play.

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Speaker 3: I'm curious about the wider effect of this as well,

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Speaker 3: because you know, yes, so the Americans are in the

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Speaker 3: sweet sport. It looks London looks appealing if you're an

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Speaker 3: Americans sitting on capital that can afford a big slice

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Speaker 3: of London realistic. But the rest of the world, did

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Speaker 3: you say, it seems to be a band in London

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Speaker 3: and the non Doms, which again was started by the

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Speaker 3: previous government, that change. Is there any hope or light

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Speaker 3: at the end of the tunnel. Should we get a

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Speaker 3: range of sort of modest measures from Rachel Reeves in

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Speaker 3: the autumn budget that some of these people may return,

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Speaker 3: or do you think that flow to the rest of

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Speaker 3: Europe or to places like Dubai. Is the trend that's

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Speaker 3: going to continue for the yple future.

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Speaker 5: I think, without trying to sound like an estate agent,

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Speaker 5: and the appeal of London is endless. I think that

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Speaker 5: you know the schools considering a job change, you know

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Speaker 5: that the schools are fantastic, and there's a lot of

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Speaker 5: area as well. Of course, yes, yes, there's lots of

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Speaker 5: pockets where you know internationals will go, and there's some

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Speaker 5: fantastic schools and greens. But I mean London is, you know,

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Speaker 5: a financial center. It is the finance hub of Europe.

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Speaker 5: So it's always going to be a destination. And I

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Speaker 5: think we're talking right now about out short term to

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Speaker 5: sort of median term struggles. At the long term looks

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Speaker 5: good for London.

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Speaker 3: So if you're a top end London property broker dealing

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Speaker 3: with these multi million pound houses, are you rooting for

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Speaker 3: Donald Trump to win some more business your way? So

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Speaker 3: we're obviously impartial on this podcast about the outcome of

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Speaker 3: the election.

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Speaker 5: But I mean possibly. I mean, look, there is differing

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Speaker 5: opinions on this. I mean some breakers have said, you know,

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Speaker 5: Trump is actually very good for business and wealth generation

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Speaker 5: over in the US. So this isn't black and white,

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Speaker 5: Donald Trump, Everyone's going to leave. But there is certainly

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Speaker 5: brokers telling me that people when Trump was leading in

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Speaker 5: the polls before Harris came in, there was definitely people

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Speaker 5: plotting a move to London for that exact reason. So

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Speaker 5: let's have a look at the data. I mean, the

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Speaker 5: last time Trump was president, we saw a twenty percent

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Speaker 5: increase compared to Obama's term in London in Americans moving

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Speaker 5: to London. There was a strong dollar to week pound

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Speaker 5: discount a play. But there is now too.

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Speaker 3: There seem to be a few signs, particularly in the

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Speaker 3: last week I would say, of possibly a bit of

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Speaker 3: a turning point for the UK housing market. We've talked

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Speaker 3: about a lot on this podcast about the difficult year

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Speaker 3: or two we've had our verier in John Steppeck, of course,

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Speaker 3: the ultimate oracle on the housing market, called it last

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Speaker 3: week his newsletter. He's the author of the Money Distilled newsletter.

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Speaker 3: He's got the headline the UK housing market is back

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Speaker 3: from the crash, do you agree?

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Speaker 5: So? I think the context John was talking about was

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Speaker 5: in terms of transactions, so you know a lot of people.

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Speaker 5: I'll be quite honest, I was really hoping that house

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Speaker 5: prices were going to fall dramatically so I'd finally be

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Speaker 5: able to afford somewheer to live. But what actually happened

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Speaker 5: was transactions fell off a cliff. No deals were happening.

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Speaker 5: They are starting to creep back in now, which is

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Speaker 5: a good sign for the overall health of the housing market.

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Speaker 5: Mortgage rates are steadily coming down. Things look in a

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Speaker 5: better place. We didn't quite have the crash in the

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Speaker 5: sense of a house price crash. John's certainly right. We

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Speaker 5: have now looked to turn a corner.

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Speaker 3: And and of course we had Doria, the Australian real

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Speaker 3: estate listing company bidding for right Move, or at least

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Speaker 3: expressing interest, sorry for right Move, which is the housing

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Speaker 3: listings website we all like to pour over secretly and.

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Speaker 1: Secretly.

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Speaker 3: But that's a great sign, isn't it that you know

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Speaker 3: listings might start to pick up that Right Move is

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Speaker 3: a is a great business that added a billion pounds

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Speaker 3: to its market value. And when this news came out

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Speaker 3: on Monday.

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Speaker 5: Well, Dave, what you said there was interesting because you know,

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Speaker 5: all of us looked at each other when you mentioned

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Speaker 5: about going on to Right Move and sort of being nosey,

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Speaker 5: and that shows that regardless almost of the state of

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Speaker 5: the housing market, we're all nosy, we're all on Right Move,

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Speaker 5: and when deals aren't happening, there's listings going on. The

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Speaker 5: supply of homes for sale is actually really high in

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Speaker 5: terms of compared to the short term at the moment,

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Speaker 5: so Right Move is almost slightly insulated from what's happening

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Speaker 5: true in terms of deals in the housing market, because

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Speaker 5: people are renting, people are noisy, people are looking at

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Speaker 5: their future prospects for home buying, even if they think

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Speaker 5: it's a few years down the line. So it's an

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Speaker 5: interesting one and I think the fact that they are

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Speaker 5: kind of insulated in that way makes them a decent bet.

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Speaker 1: But I think we're in a slightly schizophrenic August September

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Speaker 1: period because you've, as you say, like things feel like

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Speaker 1: they're unblocking a bit, with the sense that rates are

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Speaker 1: coming down potentially more slowly than people would like. But

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Speaker 1: that's the direction of travel. But you've got the government

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Speaker 1: saying be afraid, be very afraid. All of us are

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Speaker 1: sort of political analysts and observers. You do not know

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Speaker 1: the extent to which you are being spun, so you

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Speaker 1: are supposed to be very afraid. And then when the

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Speaker 1: budget eventually happens, you're like, oh, that wasn't so bad

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Speaker 1: after all. Let's let's hit the shops and hit right

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Speaker 1: move again or whether they're doing it because that's what

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Speaker 1: they're going to do, and they just want you to

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Speaker 1: be very aware. So it's so I think that with

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Speaker 1: that kind of uncertainty there probably will be more of

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Speaker 1: a chill than necessarily the economics would suggest.

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Speaker 5: Yeah, I mean, I mean it makes sense. Doesn't so

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Speaker 5: get us all worried? They've just taken out it's classic.

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Speaker 1: Yeah, the concern would be that they're not. It's not

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Speaker 1: expectation management.

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Speaker 2: It's the real thing.

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Speaker 3: You know, we're in a different situation, aren't we. The

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Speaker 3: last time Laby came in with the landslide, we had

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Speaker 3: the Blair administration and you know famously talking about being

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Speaker 3: very comfortable with the falthy rituals.

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Speaker 1: As long as they pay their taxes.

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Speaker 3: As long as they pay their taxes, but we'll find out,

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Speaker 3: won't we in a few weeks, Like how friendly is

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Speaker 3: this labor government to wealthy Americans who want to come

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Speaker 3: in and buy thirty two million pound houses in London?

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Speaker 2: Damon, thank you so much.

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Speaker 5: It's been a pleasure.

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Speaker 2: Thanks for listening to this week's in the City from Bloomberg.

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Speaker 2: This episode was hosted by me Frontine Laquell with David

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Speaker 2: Merritt and Alect gra Stratton. It was produced by Summer SNI,

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Speaker 2: production support from Isabella Ward and sound designed by Moses

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Speaker 2: and m Brendan Frantz Newman is our executive producer. Sage

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Speaker 2: Bauman is Head of Podcasts. Special thanks to Damian Shepherd.

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Speaker 2: Please subscribe, rate and review, or wherever you listen to podcasts.