We all know that the London property market is highly attractive to foreign buyers and investors. Many specialists have pointed to the homes that lie empty, purchased for the investment benefits as opposed to being a home and indicated that this is a factor in the rising prices of London property. There has also been the suggestion made by the London Mayor Sadiq Khan which could see a “first dibs” policy introduced to the capital’s property market. This would allow London residents a greater opportunity to purchase property in the capital, but what is the true impact of foreign investment in the London property market.
Thankfully research on this matter has been undertaken by King’s College London, with analysis of Land Registry data. Their findings indicate that foreign investment in the United Kingdom has increased property prices in the UK by over 20% in the past 15 years.
Land Registry figures were used to research London property market
The research focused on the average price of property in 2014, based on sold house prices from Land Registry, with this figure coming in at £215,000. This was compared with prices paid back in 1999, with this figure coming in at £70,000. The research suggests that without foreign investment, the average property price in 2014 would have been £174,000 and the difference has been attributed to the level of foreign investment present in the capital.
As you would expect, there are variations by area with most of foreign investment falling in the more exclusive areas of London and the South East of England. Areas like Kensington and Chelsea are regularly cited as the principal areas that investors want to buy, but many other areas have benefitted. Some people call this the “trickle down effect” but it is important that there are investors at all levels.
When people mentioned foreign investors, it is perhaps natural to think of oligarchs or business tycoons investing significant sums of money into high-end property. However, as we see in the UK, property investment is a strategy for people of all backgrounds and income levels.
When the pound fell sharply in the wake of the European Referendum outcome, some estate agents were inundated with requests from foreign investors looking to buy UK property. These requests were not all aimed at the top-level of the market, but it is natural that many prospective buyers would gravitate towards London.
It is not only London that has benefitted from London property market
Outside of London, areas like Manchester and Liverpool have also benefitted from foreign investment, with the major airport and Universities of Manchester making that an obvious location for foreign investors to consider.
It would be wrong to say that the sole reason that property prices in London is so high is down to foreign investors but it wold be wrong to overlook their influence. Wherever there is an investment opportunity, and this is seen in thriving or developing towns and cities across the world, people will be interested in investing.
This is because it represents a chance to turn a profit. The London property market has perhaps become a self-fulfilling market with so many foreign investors being attracted to the rising prices and growth potential, which has no doubt been informed by the investors who have already shaped the market.
If you are keen to stay fully informed about the London property market, contact a local estate agent who is involved daily. At Kilostate, we are here to support you and we look forward to assisting you with whatever property needs you have.