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Sunday, 5 March, 2000, 19:30 GMT
Millionaires to fuel property rises
Details of expensive properties
About 40 people interested in each 1m property
A 4.5bn wall of money is about to hit the London housing market with thousands of buyers looking for properties costing at least a million pounds.

The spending surge is financed to a large extent by huge city bonuses which are due to be paid this month.

In some cases individual bonuses of over 5m are being paid, after a record year for City mergers and dotcom flotations.

A survey of the London property market by the Royal Institution of Chartered Surveyors on behalf of BBC TV's Money Programme shows there are currently 3,458 people each with more than 1m to spend on a home.

In total they have 4.3bn to spend on property. The survey of 60 locations also shows that 71% of these people are cash buyers.

The Royal Institution of Chartered Surveyors contacted 24 chartered surveying firms across London.

The information was taken from 60 offices in total.

A hundred millionaires

The chartered surveyors were asked how many registered applicants on their books were looking to spend 1m or more and how many were cash buyers.

To avoid duplication of registrations at different firms within one given area, only the firm with the highest number of buyers was counted in the survey.

The survey was carried out between 21 and 29 February 2000.

A selection of the firms involved includes Hamptons, Knight Frank, Cluttons, John D Wood, Winkworth and Strettons.

One estate agent featured in the programme says he alone has 100 people on his books looking for properties costing over 1m.

Stephen Buston, sales director of Berkeley International in West London, adds: "I can say that if tomorrow I received an instruction to sell a 2.5m house, I would anticipate at least 40 or 50 people viewing, and would expect several people would wish to buy the property.

"At the end of the day the asking price is likely to be quite well exceeded."

Locking in employees

The extent to which this is being fuelled by City bonuses is demonstrated by headhunting firm Baines Gwinner.

Its calculations, made available to the Money Programme, were that bonuses being paid this year will see 20 to 30 people receiving more than 5m; 40 to 50 people getting more than 2m; 500 getting more than 1m, and 150,000 others receiving sizeable but smaller amounts.

Jonathan Baines, the firm's managing director, told the Money Programme: "Europe is now running level with the US in terms of activity.

"We are therefore seeing a huge influx of demand into the European market. We have a tug of war here which is driving up demand in terms of compensation and people trying to lock in their key employees."

Economist Douglas Macwilliams says that there is a danger that the surge at the top end of the London property market will feed through the system in the capital and then ripple out to the regions.

"What we're seeing is a very different housing market from the housing market in the 1980s.

"In the 1980s the housing market was driven by first time buyers, it was bottom up. What we're seeing now is a housing market that's partly bottom up, but is also just as much being driven by the top people pushing up the price of the more expensive properties, and that pulls up the prices of other properties as well."

Stamp duty little effect

These housing hotspots are not restricted to London.

In Leeds, for example, loft conversions in the centre are being sold for more than 1m.

Mr McWilliams, chief executive of the Centre for Economics and Business Research, predicts interest rates will climb to 8%, and says a rise in stamp duty in the Budget is a "dead cert" in order to counter potential inflation stemming from a property boom.

However others doubt this will have an effect.

Mr Simon Tyler, of mortgage brokers Chase De Vere says: "I think at the top end of the market the stamp duty effect will be minimal. Most people just add it on to their mortgage."

Property prices in a number of London boroughs rose in the region of 30% in the last year.

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06 Nov 99 |  The Money Programme
The Money Programme Home
03 Mar 00 |  Business
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23 Feb 00 |  Business
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