This is really very obvious:
Eight out of 10 properties in London’s most exclusive neighbourhoods – such as Mayfair, Belgravia and Knightsbridge – now sell below asking price, according to research by Coutts, which provides private banking services to wealthy clients.
Property prices in “prime central London”, which covers the city’s most expensive postcodes, have dropped 5% in the third quarter of 2026, as the slowdown in the UK’s property market hits its wealthiest residents.
It means some affluent people are facing hundreds of thousands, if not millions, of pounds in losses to the value of their homes, with properties selling at an average 10% discount to their asking price, Coutts found.
Prices in the highest end of London’s property market are now 14% below their peak in 2014, having been hit hard by Brexit, the Covid pandemic, higher property taxes and a surge in borrowing costs.
We deliberately tried to increase asset prices by reducing interst rates. That’s what quantitative easing was all about. Now that we’re doing the tightening, the QT, interest rates are back to real positive levels. Thus asset prices are falling. Or, OK, moderating.
And?
Well, there is an and here, yes. For as we’ll all note there’s a lot of shrieking about how we really must have wealth taxes given the surge in asset prices. But we’re already dealing with that surge. So we don’t need that taxation to deal with it, do we?
Another way to put the same point. OK, so recent asset prices have indeed been distorted, so has the wealth distribution. But demanding wealth taxation on the back of that deliberately, government, caused distortion is incorrect. Whatever the argument in favour of, or against, wealth taxation* needs to be based upon the wealth distribution after the correction that’s happening as a result of increased interest rates. Not upon the distorted one caused by QE.
Tim Worstall
*The nett there is that it’s an idiot idea. Don’t.