Hedge Fund Managers to Outspend Bankers on Homes

The clout of bankers in the London housing market this year will fall behind that of hedge fund managers for the first time, according to data from Savills.

Banker bonuses were a major factor behind rocketing London house prices in 2006-7, but Savills has said that the reduction in bonus pools in the city means “that link is now broken and the market’s dependency on City bonuses is much reduced” – which has allowed overseas investors and buyers from the hedge fund populated West End to overtake them.

It is expected that £1.5bn will be spent on London houses priced over £500,000 by those from the West End financial district, while City bankers are predicted to spend just over £1bn.

“We are seeing early signs that international wealth can be replaced by new equity, particularly from private offices and hedge funds – the West End cash generators,” said Savills’ Head of Residential Research, Yolande Barnes.

Political and public criticism of banking’s bonus culture comes alongside falling profits and a gloomy outlook for the future. Headhunters and bankers are predicting a large proportion of bank employees will receive no bonus this year – and those that do receive a bonus could see it cut by at least 30%.