falling rouble

The Revenge of the Falling Rouble

Did anyone say that an underperforming currency cannot have its revenge?

For anyone who attended a dinner party in London in the last year or two, discussing the property market was most certainly one of their five-a-day. Everybody talked about the bubble and anxiously anticipated its burst. At the same time, the media comfirmed the belief that it was the BRIC-domiciled nationals that were the drivers of these unwanted changes. Particularly because of their ability to spend enormous amounts of money on SW1 properties.

Yet, recent perspectives on the cooling down of the market have started to emerge. Some real estate views by the British Bankers’ Association reiterated the expectation that the cool down is about to happen, but looking beyond the UK eye pit, the question is whether the West will be dealing with a simple chill or a freezing moroz?

Despite the debatable degree of globalisaton we are currently in (Ghemawat versus many others), currency devaluations have had serious economic impact around the world – from the Mexico peso crisis in 1980s to the case of Argentina in 2014, all affecting economies beyond national borders.

The Telegraph recently referred to the beginning of another cold war and while this is not something we want to take a stance on, we would like to argue that there is one of dollars versus roubles. The 40% fall in rouble’s value this year alone, can’t be ignored in the context of what it means for its holders’ purchasing power and subsequently for the ever price-frenzy SW1 properties.

The real questions to be posed is whether the time of the SW2 codes has arrived; who can be more cold-resistant; have the Brits dressed up well for the potential losses in property market value and can we afford to tackle the global warming problem through some frosty tension.

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