That is way overselling any evidence of what's happened. The tax was enacted less than a month ago. Volumes are way down right now, but the effect on prices are uncertain. I think the consensus is that people are in wait-and-see mode.
What happens when the bubble pops?
http://www.citylab.com/housing/2015/05/why-billionaires-dont...
The whole tax penalty is thwarted that way
We still have structural problems in the city property tax code -- for example condo and co-op buildings have to be taxed as if they were rental buildings, a complex calculation that generally undervalues them. But if and when those are fixed, I think full property taxes are would be enough. I don't see the need for a punitive rate on top of that. At least not in NYC, other cities may have a bigger problem with absentee owners.
"In the evenings an eerie stillness settles on [the area]. That’s because these new owners are so rich in both money and global property that their London addresses frequently sit empty, functioning more as dust-sheeted deposit boxes rather than actual homes."
This is not why we have cities. We have cities to allow interaction. Look where the artists, musicians and marginal people are going, for they are the new thing. Hint: it isn't London.
I'm going to throw out Nashville as a thought for musicians, and maybe Pittsburgh for tinkerers.
Now there's some interest in the cheaper seaside towns - Margate, even Bournemouth.
Brighton used to be on that list but it's almost as expensive as London now. Likewise Bath and Bristol. (Not seaside towns, but a big arts scene in the 60s and 70s, now very much gentrified.)
I suspect if people can't get out they'll head West and North. Parts of the West Country are almost affordable. Parts of the North are very affordable, but they're still in the dilapidation phase and don't seem to be in danger of becoming cool yet.
The idea of a tax virus sounds terrifying!
I don't see a problem here. The problem will correct itself eventually, with regular citydwellers all moving to cities smart enough to enact these laws, and abandoning cities like London that become completely unaffordable. Eventually the latter cities will collapse, and these wealthy foreigners' properties will be worthless, like all the $100 houses in Detroit.
There's a tipping point coming fairly soon where voters will logically prefer the short term benefits of protectionism vs additional inequality.
If capitalists want to continue down the path of free trade, they better be prepared to redistribute the additional wealth generated. That or find a way to disenfranchise a whole lot of pissed off citizens.
Technological development has lowered the costs and availability of most things in our lives. If you look at the actual practices of governments and individuals over the last few centuries you won't find much truly free trade. You'll find all kinds of protectionism, exploits of positional control over markets, currency flows (I'm looking at you China), and the occasional super-power deciding to to have a war on ... well slavery was the one that mostly worked.
But free trade? Well, most countries agree that they should be allowed to freely export whatever they want... imports are another matter of course.
But two days after it had been on the market, I saw a couple of guys walking through the vacant lots. I introduced myself and asked if they had any questions about the neighborhood. In a heavy accent, the younger guy asked "Who owns these other lots? Do you think they would sell them?" They wanted to buy up every vacant lot and wrap our building with condos. I mentioned the vacant lot that had just gone up for $600,000 - the older Russian smiled, saying "We make good offer. Seven hundred thousand cash."
I figured maybe they were boasting. That week, the lot went off the market.
On one hand, I feel like we got in when the getting was good, but on the other hand, I'm not terribly excited about what's going to get built around us. I think my general feeling about it is best summed up as, "Oh boy, here we go."
They say you can make a small fortune in theater - you start with a big fortune. You build a theater, and now you've got a small fortune ;)
http://www.nestoria.co.uk/mayfair/property/rent/2?price_min=...
But either the owner isn't interested in the money/hassle/attention, or occasionally uses the property — it's difficult to show off your fancy London apartment if people are living in it, and you can't casually lend it to friends or relatives.
I pay $2k to live in a city centre. I could pay half that to live at the edge of the city, but then I'd be at the edge of the city.
How exactly do they pay utilities/etc without anyone noticing their transfers? But I don't believe they are successfully hiding anything in any case, governments want everyone to be guilty of something so they can achieve whatever political outcome they need through selective enforcement.
If they're getting an absurd percentage increase from property values alone, an extra few percent won't make a difference.
Not everyone min-maxes their capital. Governments probably end up eating them through inflation and taxes in the long run (but in the long run, we're all dead).
Related is this story right now: http://www.nytimes.com/2016/07/21/world/asia/1mdb-malaysia-u...
There is a lot of new construction in different parts of Virginia along the orange line, but the vacancy rates are extremely high. Fewer people want to pay a premium to live by an orange line station with the current problems.
The apartment in which my girlfriend and I live now was a cash purchase after only three days on the market with no escrow. It had to be, or someone else would have bested it. If you need a loan to buy? Forget it.
Meanwhile, there are six immaculately tended walk-ups on the block that have been completely empty for the past year, but for the staff.