Last summer, the deputy PM of Greece, Evangelos Venizelos, said London has replaced Switzerland as the destination for wealthy Greeks looking to avoid taxes. Estate agents in London have reported a rise in wealthy Greeks buying up property in order to move their wealth to the UK. But Greek buyers are just the tip of the iceberg.

With that in mind, when looking at the London property market, traditional measures of assessing value, like how many years of annual salary a typical worker needs to buy a property in the city, are far less relevant than in other UK cities. For the record the average property price in London according to Nationwide (at the end of 2013) was £345,000, while the Land Registry lists the average price in January 2014 at £410,000. Average annual salaries are £35,000 in the capital, so property prices are currently 10-11 times annual salary, which is twice as high as the UK average of just over 5 times annual salary.

However, in London this ratio is set to rise further over the next five years because salaries have been more or less stagnant, rising by less than 1% per year, while Savills is forecasting that property prices in London will increase by 24.4% between now and the end of 2018. This would make the average London property price £430-510,000 while average salaries will be around £37,000 so the salary/property ratio will rise to 12-13 times annual salary.

Does any of this matter? Well, if you are a landlord in London probably not, as your portfolio is expected to increase in value by almost 25%. However, as has been widely reported in the press lately, the likelihood of UK base rates remaining at 0.5% until the end of 2018 are very slim. Rising base rates means rising mortgage payments and with average rents not rising as fast as property prices, gross rental yields are edging closer to 4% than 5% so a net yield of less than 4% is becoming increasingly common in London.