Prime London property rises with world's political turmoil House prices in London's most desirable neighbourhoods have risen in direct correlation with political turmoil overseas, according to new research into the "safe haven" status of property investments in the capital. The influx of wealthy foreign property investors in London has fuelled a 10 per cent annual increase in house price growth, but new research into the "safe haven" effect by Oxford University's Saïd Business School suggests the phenomenon operates independently within small zones of the city and across a range of income levels. Tarun Ramadorai, professor of financial economics, and Cristian Badarinza, a research fellow, mapped areas of London associated with foreign countries using census data from the Office for National Statistics and compared them with house price transaction data from the Land Registry and Nationwide Building Society, as well as information on political and economic risk. In local wards with a higher proportion of residents from a particular country (a difference of one standard deviation), house prices rose by nearly half a per cent in the months following an increase of one standard deviation in that country's political risk. Prof Ramadorai said: "The granular level at which we have analysed the data allows us to confirm that safe-haven demand effects from southern Europe, China, the Middle East, Russia, and South Asia are indeed important factors in explaining the dynamics of London house prices." The effect went beyond the market for prime central London property, he said, although it was most pronounced in that segment. Wealthy Middle Eastern residents, for instance, favoured expensive properties in Little Venice in west London; but volatility at home also made an impact on the housing market in less fashionable areas popular with such groups, such as Edgware Road or Wood Green. Unrest in Pakistan has pushed up prices in Wimbledon Park - a well-heeled area popular with those from the south Asian country - as well as Southall. This is wealth protection on a large scale. Wherever there is a problem in the world, you're pretty much guaranteed to see the demand feed through to this end Roarie Scarisbrick, Property Vision Estate agents and property advisers said the conclusions backed up their anecdotal experience. Henry Pryor, a buying agent, said: "This research reinforces what we've known for some time: that central London property is in effect a reserve currency." Roarie Scarisbrick, director of high-end London agent Property Vision, said buyers were attracted by London's robust legal system, benign tax environment and the strong performance of housing as an investment. "This is wealth protection on a large scale," he said. Wherever there is a problem in the world, you're pretty much guaranteed to see the demand feed through to this end. The Arab spring produced the most extreme example to date, he added: "It really affected the market for a while. People abandoned the normal approach to value. Even if they had to overpay by 20 per cent, it was still worth it to get the money out of their country. London agents cited Egypt and Israel as current sources of investment in the market. The academics used moments of political crisis across the world as well as data from bond yield spreads to gauge broader economic uncertainty. Prof Ramadorai said the ward-level effects were reinforced by a "spillover effect" on data from Nationwide, which is restricted to mortgage holders. If the top end of the market is affected it pulls the rest of the market along with it. Everyone's price expectations change," he said. But Prof Ramadorai offered consolation for those Londoners who see property ownership as increasingly out of reach, noting that the safe haven effect appears not to be permanent. When uncertainty arises, prices go up, but when it recedes, they seem to fall back to their mean.