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Will the Olympic effect work for property prices in London?

But the evidence on the property forums this week is confusing. This probably reflects the reality that the global finance crisis has thrown everyone's predictions out the window. It is becoming increasingly hard to find any predictions on the future.

Yesterday Knight Frank was bold enough to publish predictions for the UK residential market for 2009. But beyond generalisations that recovery could be seen by the end of 2009, early 2012, few analysts are making hard estimates.

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According to those using the totallyproperty.com forum the Olympics will either be a great boost or a bad investment. Those in favour of the Olympic effect point out that prices in Stratford, east London, have already been rising in anticipation. Those against point out that after the Athens Olympics in 2004 there was a glut of apartments for sale and expectations were not realised.

But Knight Frank also pointed out that prices in the UK market are going to bottom out in the next few months so buying in London in the next six months could be a good idea.

Property investors on the singingpig.co.uk property forum are not terribly impressed by the efforts of politians to save the economy. Most expect it to take a long time – years and years for the bank bailout to have any effect and actually kick start the property markets again.

One argument for this is that unemployment is set to rocket. We all know there have been a lot of job loses already in the property and finance sectors. But posters point out there are now going to be huge losses in the banking sector and the hotel, airline, car manufacturing, retail and hospitality sectors are likely to suffer too.

Unemployment leads to more people being unable to pay rent and mortgages. So we could be heading for a rise in repossessions. Bad for some, but it could also be the source of bargains for those with money to spend on property.

And as one poster points out – at least petrol is getting cheaper!

Seasoned property investors are holding onto their money these days, according to various reports. One popular past time is trying to find the next property hotspot. There is some interesting speculation on the totallypropertyforum on Croatia. It has a beautiful coastline, better infrastructure than many east European countries and is just the other side of Italy but has failed to have any kind of property boom.

Although prices have risen over recent years there are no big developments similar to those in Bulgaria and Montenegro. Apparently old stone houses can be bought at good prices but only investors buying holiday homes seem interested.

One problem, according to the forum, is the length it can take to get planning permission with instances of two years or more mentioned. There is also a poor holiday rental period and none of the big touristy attractions like golf courses.

One poster recounts taking three people from a City investment fund to Istria and after four days they all booked holidays to Croatia. 'But none of them put their money down because the numbers didn't stack up. As simple as that. So they will put their money in Romania where you probably wouldn't even dream of going for a holiday, but will come to Croatia to enjoy its beauty,' reports kk1974.

But there does seem to be some hope for Croatia. Posters point out that if the government spent more on promoting Croatia then the holiday rental period might improve and if larger developers were attracted then the golf courses might be built and larger hotel groups might show some interest.

The planning system also needs to be overhauled but according to those based in Croatia this could take some time. However European Union membership could be one way of bringing Croatia into the 21st century in terms of property investment.

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