You might have thought even the most brazen of estate agents would struggle to find a silver lining to the attacks that brought fear and death to the heart of London. But you would be wrong.
This week Spicerhaart a firm of agents, suggested demand for centrally-located properties had risen as workers tried to avoid the daily commute to work.
Inquiries had risen by as much as 5 per cent at some offices, such as Clerkenwell, said Russell Jervis, managing director. “More and more commuters are fearful of their safety on public transport and would prefer to walk to their workplace.”
Only a fortnight ago agents were predicting the Olympics win would kick start London’s becalmed market.
Since July 7, however, they have been trying to limit the damage fall-out by reassuring potential buyers that the market would not fall.
Viewings and registrations have remained level, they claim, while the only impact has been a delay to deals while surveys within the M25 were cancelled in the days after the attacks. In truth, the impact of the bombs on the London property market is hard to assess for a number of reasons.
First, most people had long thought it likely that attacks were inevitable at some point, given that security services knew of cells operating within the UK. The city’s population also lived with numerous bomb attacks during the long IRA campaign against the mainland.
Second, in a city of more than 7m people, many of whom work for their employer’s head office or only office, there is little choice. They can move further out – but still have to commute in every day.
Some experts agree with Spicerhaart that city centre living may become more popular as people avoid public transport. among them Geoff Marsh of London Property Research said: “There has always been a premium in being able to walk to work because everyone is short of time, and now there is a safety aspect to that.”
Yet living in central London is only a viable option for affluent dinky (double-income no kids) couples, given today’s high prices.
The example of other western cities that have experienced terror attacks suggests isolated incidents do not have a huge impact on property markets. Madrid, for example, has not underperformed the Spanish market average since last year.
In New York, the property market suffered a small glitch after the September 11 terrorist attacks but prices have soared since then.
“There, you had an entire city closing down. It was phenomenal, on a truly different scale,” said Peter Bolton King chief executive of the National Association of Estate Agents. “I have not picked up any vibes here from our members that people are changing their buying and selling habits after the events of the last month.”
Where there may be some cause for concern is in those markets dominated by foreign investors from the Middle East, Ireland, the US and Asia. in particular new flats and central London houses. London has long been attractive to such buyers, often from relatively unstable countries such as Russia or Kuwait, who want to place money in a safe haven.
“We could assume that some demand at the top end of the market could be weakened purely because a large proportion of buyers are discretionary purchasers rather than buying through necessity,” says Liam Bailey, head of residential research at Knight Frank, the agents.
Yet investors may consider themselves statistically unlikely to be hit by any the threat of further attacks although probable, , given the vast size of the city. In addition, since most European and US cities are thought to be in the line of fire, few places are immune. This is the view of Mr Bolton King: “Where is now safe? You could go to Coventry or Birmingham, but are they safer?”
“I think the main impact will be deferral of activity rather than cancellation,” says Mr Bailey.
Mr Marsh thinks one market that may be affected is homes for foreign students. who may decide to study elsewhere. ““Their parents are extremely concerned about the welfare of their offspring. They may think they should encourage them to go to Melbourne rather than London or New York,” he says.
Realistically, the most pessimistic scenario is that the attacks could cause a fall in tourist numbers or consumer spending in London, which will damage the city’s economy – indirectly affecting property prices.