An investigation byÂ The TimesÂ suggests that foreign investment in the UK property market is making it more difficult for Britainâ€™s first time buyers to step onto the property market.
London’s Battersea Power Station Development faced heavy criticism when it was discovered that 865 flats in the first phase of the redevelopment were sold to overseas buyers. Consequently, the second phase of 254 homes was marketed only in London, but the third phase of 539 homes saw campaigns targeting Beijing, Tokyo and Kuala Lumpar as well as New York and Los Angeles.
Aprilâ€™s news that Londonâ€™s house price growth is the second lowest across England and Wales may well encourage the investment of overseas money in property away from London. Â High-end properties in the most expensive London boroughs saw the smallest annual increase, at 0.3 per cent, whilst the lower end of the market has so far seen annual growth of 4 per cent.
In Manchester, at a housing development of 282 flats, over 93 per cent of properties have been purchased by foreign residents or overseas registered companies originating from eighteen different countries, including Azerbaijan, Japan, Zimbabwe and China.Â Only two of the flats are lived in by their British owners, with the rest either empty or occupied by tenants.
The announcement of the Brexit vote brought with it a surge of new interest from overseas buyers, hoping to cash in on a deflated pound while at the same time cashing in on the rising value of property. Asian buyers, in particular, have been incentivised by destabilised financial markets, and theÂ Financial TimesÂ estimated earlier this year that around Â£4.5 billion of live equity was targeting London from Hong Kong investors, who were not affected by the capital controls of China.
In March, theÂ Sunday TelegraphÂ shared research byÂ Savills, which showed that Middle and Far Eastern buyers invested around Â£1.9 billion in regional property in 2016. The report attributed nearly one third of all investment in the UK’s commercial property market to foreign investment, with 80 per cent of Edinburgh’s commercial property investment coming from overseas.
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