Over the last year, the value of gold has slumped by 2.3 per cent. And the value of property in prime central London has risen by more than 8 per cent, according to the latest figures.
So is gold as safe as houses?
Long term, gold as an investment has been one of the best performing asset classes, with a growth over the last decade of a staggering 379 per cent against 124 per cent for prime London property. But the gold price is increasingly volatile, subject to the mood of billions of small buyers, especially in areas such as India where any financial alarm sends everyone rushing for the reassuring presence of gold in the house. The 2008 crisis saw gold spike in value, only to be followed by a devastating plunge when things cooled down and people returned to the convenience of a savings account.
Prime central London property, on the other hand, is largely immune from short term fluctuations. The cost and delay of disposal is one factor, of course, but the main reason is that a property in London has intrinsic value that is not dependent on buyer sentiment but its use as a place to live and do business in the most vibrant and cosmopolitan city in the world.
Buyers like the large houses, secluded gardens and leafy street scenes in the outer prime area. And at this stage of a developing market, prices per square metre look like excellent value.
As a result of this interest, outer prime London prices are expected to be growing by as much as 6.5 per cent a year by 2015, better than the more modest but sustained growth predicted in prime central London for the next couple of years. However, prime central London is expected to start growing substantially again in 2015/16 as the second wave of the recession passes through.
Prime central London will be flat for 2013, rise by aboout 4 per cent in 2014 and by 8 per cent in 2015, analysts say.
Property economists are also bullish on the private rented sector, pointing to the latest census figures that show the rising generation is moving to city centres to live. They cannot afford to buy and are increasingly deciding to rent long-term.
Until the credit crunch, people assumed that the only way to get a roof over your head was to buy. Increasingly, however, they are coming to the conclusion that renting offers a better package of location, space, flexibility and long term value than buying.
This is especially true of young professionals, who now aspire not so much to own their own property as to live in the city, where the under-35s now account for 35 per cent of the adult population according to the latest census figures. In any event, it is now almost impossible to raise the deposit - the average first time buyer deposit has risen from £12,000 ten years ago to £58,000 today.
This trend has led analysts to predict rental growth in prime central London of 3 per cent in 2013, rising to 5.5 per cent in 2014.
The predicted capital growth in prime central London combined with the rental growth caused by the high demand and relatively low supply is a clear investment opportunity.
Obama is preparing to allow a raft of tax cuts introduced as a temporary measure by George W Bush to lapse as part of his ongoing war with Republicans over the budget deficit. As a result, the top rate of federal income tax will rise from 35 per cent to nearly 40 per cent, possibly as soon as the new year.
At the same time, Osborne is trying to boost London's status as the world's premier financial centre by cutting the top rate of income tax from 50 per cent to 45 per cent in April.
London's new tax advantage will be particularly pronounced in the case of rival financial centre New York, which has a higher State income tax bracket that kicks in at earnings of $2m (£1.25m). Many rich New Yorkers commute from New Jersey rather than pay the higher tax rate.
We expect the tilting of the tax slide in London's favour to attract many CEOs and top echelon executives over here.
Once in London, they will see the obvious superiority of this great city as a base of operations. Its position between the US and the Eurozone and its fast transport links with Paris, Brussels and Berlin make it a great place for international business.
And London's vibrant cultural life is now far superior to New York's – just look down Broadway and you will see a line of musicals that have been imported from London's theatreland, for example.
Finally, Americans coming to London will discover that the lovely Georgian town houses of Marylebone, the gracious terraces of Regent's Park and the sylvan villas of St John's Wood are wonderful places to live – far better, dare we say, than any Manhattan loft.
The prime central London property market is stabilising after a period of growth, according to the latest batch of figures.
According to the Land Registry, price growth in the City of Westminster slowed slightly last month to 1.3 per cent, but as that translates to an annual growth rate of a very healthy 17.4 per cent this cannot be seen as a cause for concern.
Annual growth in the London Borough of Camden, which covers Primrose Hill and the eastern part of Regent's Park, was a much less impressive 6.8 per cent but most of the borough is outside the prime central area.
Land Registry figures are comprehensive and authoritative, but relate to done deals so lag behind the market somewhat. The latest report from market analysts Lonres also shows substantial growth of 10 per cent for flats and 12 per cent for houses in the prime central area, but they base this on the W1 and SW1, 3, 7 and 10 postcodes, which more closely match the prime central area.
Lonres also surveys agents for a more current view of the market, and find that more property is becoming available but the number of transactions is down, leading to the prospect of a buyers' market in the medium term.
Our view is that with the uncertain outlook, both householders and investors would be well advised to get themselves in the position they want to be in for the medium term, especially as mortgages are now more available then at any time since the credit crunch.
Property prices in the City of Westminster rose by an astonishing 18.3 per cent in the year to August, according to the latest figures from the government Land Registry.
The increase is the highest in the UK by a very long way, and justifies the interest in prime central London that has been shown by investors from around the world through the thick of the global financial crisis.
The growth in Westminster is is stark contrast with the overall figure for England and Wales (for historical reasons, the Land Registry does not cover Scotland) of just 0.7 per cent.
The City of Westminster has within its borders some of the most desirable real estate in the world from Buckingham Palace down, and includes most of Sandfords' home turf in Marylebone, Regent's Park, Primrose Hill and St John's Wood.
All these areas have seen surging prices over the last year despite fears of a double dip recession. The best houses and apartments in these areas now represent a safe and secure place to store funds as well as a base in some of the loveliest areas in the most vibrant, cultured and cosmopolitan city on earth.
Kensington and Chelsea, the borough covering most of the rest of the prime central London market, managed 17.9 per cent.
High rents have persuaded many property owners to remove their flats and houses from the sales market and let them out instead.
The resulting shortage of properties for sale has helped maintain central London prices - some figures estimate the drop in the supply at as much as 30 per cent.
Unfortunately, the upsurge in properties coming onto the rentals market has meant that rents are now under pressure. Tenants are demanding more realistic rent levels.
Landlords can still expect excellent returns on their investment, but our advice is to be flexible on the rent to prevent extended voids. Losing a little rent is almost always a much better option than leaving the property empty for weeks, not earning any rent at all.
Sandfords has opened a new office in Primrose Hill, bringing the combination of deep local knowledge and international connections that has been so successful in the area from Oxford Street to St John's Wood. The new branch handles both sales, managed by Simon Halliday, and lettings, under the direction of Julia Garber.
According to Simon Halliday, the main appeal of the area is its community spirit. "The big feature is the open space and the sense of a village community. There is only one street in and one street out, so there is no through traffic. There is a wonderful high street with bespoke shops and no chains. There are wonderful schools. If you want urban activity there's Camden and the West End is only a short journey away. "North London born and bred, Simon has been well known in the local property market since the 1980s. He is married with two grown up sons and is a big Tottenham Hotspur supporter.
For the last few years, Simon has been running his own property search service, locating houses for clients in the area, until he was headhunted by Sandfords. He relishes the prospect of returning to the property sales. "Primrose Hill is surprisingly exclusive - there are a lot of people who have never heard of it," he says. "Everybody knows Notting Hill and Holland Park but Primrose Hill is a bit of an oasis, a gem. I love the architecture. It has a very nice selection of properties with very few ugly high rise blocks, predominantly freehold houses so there are a lot of young families. "The friendly community atmosphere has attracted many celebrities to the area, but to live their lives rather than as a statement of their success. I've acted for a number of celebs to buy in the area, but I don't like to name drop because they value their privacy," Simon says. "We are very discreet, which is why we get their business again and again."
Renters also love Primrose Hill for the wide range of stylish family accommodation, says Julia Garber. "It is a very family oriented area and a bit bohemian, so it appeals to a lot of people who don't want to live in St John's Wood or Marylebone," she says. "We get a lot of musicians, actors and people in the media, and I have had a number of French clients who have compared it with Montmartre, the artistic area on a hill to the north of Paris. "On a sunny day, the cafes of Regent's Park Road spill out on the pavements, bringing a touch of Parisian cafe life to north London", Garber says.
Primrose Hill is a place people go because it is a little bit alternative, an attractive area with a very nice village atmosphere and instant access to the Hill itself, with its panoramic views over London and its peaceful, remote atmosphere.Many music stars have loved the alternative vibe. The Rolling Stones were brought here in a a huge Rolls-Royce at dawn one day in 1966 to shoot the picture for the cover of Between the Buttons. They were amazed to see a hippy welcoming the day by playing a flute, standing on one foot and completely oblivious to their arrival. Paul McCartney wrote The Fool on the Hill after an encounter with a mysterious stranger in a belted raincoat on a walk in 1967.
The property market in central London is continuing to motor away from the rest of the UK, according to analysis of the latest official Land Registry figures.
Prices in London Central (the Land Registry's term for the boroughs of Kensington and Chelsea and City of Westminster) rose by 0.6 per cent in the first quarter of 2012, bringing the rise over the previous year to 10 per cent. For England and Wales as a whole, prices fell by 0.7 per cent on the quarter and by 3.3 per cent for the year.
Since the depth of the property bust in 2009, prices in England and Wales have floated up by a gentle 11.2 per cent but flats in London Central have rocketed ahead, growing by 28.8 per cent.
Interestingly, the figures also show that the number of transactions in London Central has continued to fall, to a new low of 1,186 in the first quarter of which a mere 186 were houses. Clearly, both owner-occupiers and investors are unwilling to part with what may well be the only asset they hold that is actually increasing in value.
The future is likely to be more of the same.
The elections in Greece and France have fuelled uncertainty and doubt throughout the Eurozone and forced the wealthy to re-examine their options. Many are looking at prime central London as a safe haven for their investment funds.
The election of France's first socialist president in decades sparked a surge of searches on estate agents' websites and Google for properties for sale in London, especially for properties in the £5m+ bracket despite the prospect of a mansion tax.
We expect an influx of both investors and immigrants including French bankers and entrepreneurs coming over here for the more business-friendly environment. This invasion on two fronts will boost both ends of the market, with lettable flats at the lower end being snapped up by investors and large family homes being in demand from business people looking for somewhere to live.
The only real action in the London property market is now in properties worth more than £2 million, according to the banking and mortgage giant Lloyds TSB.
Sales worth more than £2m grew by 9 per cent in 2011 but sales of properties worth £1m were static.
Nothing illustrates better the fact that in central London a million pounds buys you a fairly ordinary family home, not a palace.
The international super-rich are now paying a minimum of £2m for the special kind of home they desire, and it is only the international super-rich who are able to deploy that kind of investment in the current economic climate. And for them, London still represents a glowing investment opportunity, combining political and economic stability, the status of the world's greatest city and good financial returns.
The enduring popularity of central London as one of the places where all billionaires have at least one home also explains another interesting figure in the Lloyds TSB figures: London accounts for two thirds of all UK sales above £1m with 4,329 transactions in 2011 compared with 2582 in the rest of the country. Wales had just 13.
The breakdown of £1m+ properties within London is also changing, the figures show. In the past, nearly all the top addresses in the capital were in the London Borough of Kensington and Chelsea.
In 2011, Westminster and Camden together accounted for more £1m+ properties than Kensington and Chelsea - most of them in Sandfords' domain of Marylebone, Regent's Park and St John's Wood.
Many properties owned by corporations are not homes but investments intended for renting out. However, letting properties at this rarified level does not yield particularly impressive returns and the new tax will make many such investments very marginal indeed.
So investors seeking better prospects are likely to move downmarket and buy several cheaper properties instead. Some may even discover what we have been advising for years - that the most profitable rental sectors are in such areas as student accommodation. Buying student halls of residence might not enhance your social status as much as a house in The Bishop's Avenue but they will do a lot more for your bank account.
The other motive for foreign investors to buy through offshore corporations is simply that they value their privacy and do not want their name to be publicly available to anyone who makes a search in the Land Registry. These people will be understandably angry about the extra tax but they will pay. They can afford it.
For these reasons we do not expect a meltdown of the prime central London property market, but there will be temporary disruption while sales that are currently going through are renegotiated to take the new tax regime into account. Then things will settle down and it will be business almost as usual, though with some price adjustment to mitigate the effects of the tax and adjust for investors leaving the sector for lower priced properties.
The affair highlights the urgent need for reform of the Stamp Duty Land Tax, a bureaucratic monster that ought never to have been introduced (by Gordon Brown). The slab structure of the duty, with big changes in rate at specific price levels, means that the market is terribly distorted at those points.
A system that increases the tax rate gradually without the dislocations is desparately needed, but the government does not seem to have the vision to create one.
