I think the overall connection of capital flows is prescient, but fails to acknowledge deeper drivers in real estate markets. Those drivers being inventory levels, new housing starts and absorption rates.

Your analysis suggests that the London market is going to experience a slowing in absorption, and I don't think any reasonable person (including me) would disagree with you in that regard.

However, if a real estate market is going to experience any significant decline, lower absorption rates have to combine with inventory levels reaching overbuilt levels (I believe the US had something like 3-5 years of unsold housing inventory at its peak) and housing starts that are significantly above the market's requirement to fulfill demographic needs.

Finally, the market needs some sort of impetus for selling activity. Given the political situations that have brought wealth from developing markets to London, I don't see a lot of wealth preservation alternatives for these buyers so a mass exodus is pretty unlikely in my view.