Latest / Stephanomics / In the City: Wealthy Americans Are Coming for London's Pricey Homes

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In the City: Wealthy Americans Are Coming for London's Pricey Homes · Stephanomics

• 0:00
  Speaker 1: Hello, Vhotonomics fans. It's Allegra Stratton. I want to tell
• 0:03
  Speaker 1: you about our sister show in the City. It features
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• 0:13
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• 0:26
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• 0:28
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  Speaker 2: Bloomberg Audio Studios, Podcasts, Radio News.
• 0:39
  Speaker 1: I'm Francie Laqua, I'm David Merritt, and I'm Alegra Stratton.
• 0:42
  Speaker 3: We're back in the studio. It's back to school week
• 0:45
  Speaker 3: for lots of people, back to school vibes around London.
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  Speaker 3: Don't you think it.
• 0:48
  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
• 6:39
  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
• 10:13
  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
• 10:19
  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
• 11:02
  Speaker 5: discount a play. But there is now too.
• 11:03
  Speaker 3: There seem to be a few signs, particularly in the
• 11:05
  Speaker 3: last week I would say, of possibly a bit of
• 11:08
  Speaker 3: a turning point for the UK housing market. We've talked
• 11:10
  Speaker 3: about a lot on this podcast about the difficult year
• 11:14
  Speaker 3: or two we've had our verier in John Steppeck, of course,
• 11:16
  Speaker 3: the ultimate oracle on the housing market, called it last
• 11:19
  Speaker 3: week his newsletter. He's the author of the Money Distilled newsletter.
• 11:22
  Speaker 3: He's got the headline the UK housing market is back
• 11:25
  Speaker 3: from the crash, do you agree?
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  Speaker 5: So? I think the context John was talking about was
• 11:29
  Speaker 5: in terms of transactions, so you know a lot of people.
• 11:34
  Speaker 5: I'll be quite honest, I was really hoping that house
• 11:36
  Speaker 5: prices were going to fall dramatically so I'd finally be
• 11:39
  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.
• 11:52
  Speaker 5: Mortgage rates are steadily coming down. Things look in a
• 11:55
  Speaker 5: better place. We didn't quite have the crash in the
• 11:57
  Speaker 5: sense of a house price crash. John's certainly right. We
• 12:01
  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
• 12:07
  Speaker 3: estate listing company bidding for right Move, or at least
• 12:11
  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.
• 12:19
  Speaker 1: Secretly.
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  Speaker 3: But that's a great sign, isn't it that you know
• 12:23
  Speaker 3: listings might start to pick up that Right Move is
• 12:25
  Speaker 3: a is a great business that added a billion pounds
• 12:28
  Speaker 3: to its market value. And when this news came out
• 12:31
  Speaker 3: on Monday.
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  Speaker 5: Well, Dave, what you said there was interesting because you know,
• 12:34
  Speaker 5: all of us looked at each other when you mentioned
• 12:36
  Speaker 5: about going on to Right Move and sort of being nosey,
• 12:38
  Speaker 5: and that shows that regardless almost of the state of
• 12:42
  Speaker 5: the housing market, we're all nosy, we're all on Right Move,
• 12:45
  Speaker 5: and when deals aren't happening, there's listings going on. The
• 12:48
  Speaker 5: supply of homes for sale is actually really high in
• 12:51
  Speaker 5: terms of compared to the short term at the moment,
• 12:54
  Speaker 5: so Right Move is almost slightly insulated from what's happening
• 12:59
  Speaker 5: true in terms of deals in the housing market, because
• 13:02
  Speaker 5: people are renting, people are noisy, people are looking at
• 13:05
  Speaker 5: their future prospects for home buying, even if they think
• 13:08
  Speaker 5: it's a few years down the line. So it's an
• 13:11
  Speaker 5: interesting one and I think the fact that they are
• 13:13
  Speaker 5: kind of insulated in that way makes them a decent bet.
• 13:16
  Speaker 1: But I think we're in a slightly schizophrenic August September
• 13:20
  Speaker 1: period because you've, as you say, like things feel like
• 13:23
  Speaker 1: they're unblocking a bit, with the sense that rates are
• 13:26
  Speaker 1: coming down potentially more slowly than people would like. But
• 13:29
  Speaker 1: that's the direction of travel. But you've got the government
• 13:31
  Speaker 1: saying be afraid, be very afraid. All of us are
• 13:34
  Speaker 1: sort of political analysts and observers. You do not know
• 13:36
  Speaker 1: the extent to which you are being spun, so you
• 13:38
  Speaker 1: are supposed to be very afraid. And then when the
• 13:41
  Speaker 1: budget eventually happens, you're like, oh, that wasn't so bad
• 13:43
  Speaker 1: after all. Let's let's hit the shops and hit right
• 13:45
  Speaker 1: move again or whether they're doing it because that's what
• 13:49
  Speaker 1: they're going to do, and they just want you to
• 13:50
  Speaker 1: be very aware. So it's so I think that with
• 13:52
  Speaker 1: that kind of uncertainty there probably will be more of
• 13:55
  Speaker 1: a chill than necessarily the economics would suggest.
• 13:58
  Speaker 5: Yeah, I mean, I mean it makes sense. Doesn't so
• 14:00
  Speaker 5: get us all worried? They've just taken out it's classic.
• 14:03
  Speaker 1: Yeah, the concern would be that they're not. It's not
• 14:05
  Speaker 1: expectation management.
• 14:06
  Speaker 2: It's the real thing.
• 14:07
  Speaker 3: You know, we're in a different situation, aren't we. The
• 14:09
  Speaker 3: last time Laby came in with the landslide, we had
• 14:11
  Speaker 3: the Blair administration and you know famously talking about being
• 14:14
  Speaker 3: very comfortable with the falthy rituals.
• 14:15
  Speaker 1: As long as they pay their taxes.
• 14:16
  Speaker 3: As long as they pay their taxes, but we'll find out,
• 14:19
  Speaker 3: won't we in a few weeks, Like how friendly is
• 14:21
  Speaker 3: this labor government to wealthy Americans who want to come
• 14:25
  Speaker 3: in and buy thirty two million pound houses in London?
• 14:28
  Speaker 2: Damon, thank you so much.
• 14:29
  Speaker 5: It's been a pleasure.
• 14:33
  Speaker 2: Thanks for listening to this week's in the City from Bloomberg.
• 14:35
  Speaker 2: This episode was hosted by me Frontine Laquell with David
• 14:38
  Speaker 2: Merritt and Alect gra Stratton. It was produced by Summer SNI,
• 14:41
  Speaker 2: production support from Isabella Ward and sound designed by Moses
• 14:44
  Speaker 2: and m Brendan Frantz Newman is our executive producer. Sage
• 14:48
  Speaker 2: Bauman is Head of Podcasts. Special thanks to Damian Shepherd.
• 14:52
  Speaker 2: Please subscribe, rate and review, or wherever you listen to podcasts.