The UK’s vote to leave the EU caused the level of overseas property investment to temporarily dip. However, the market soon recovered, as overseas property buyers took advantage of the subsequent favourable exchange rate.
In the last half of 2017, over half of all properties for sale in London’s most exclusive postcode areas, including Belgavia and Kensington, were purchased by investors from overseas. Across London, the figure is around 30%.
The proportion of homes bought by foreign investors reached its highest level in five years, with signficant numbers of Middle Eastern buyers boosting the figures, while European buyers have decreased since the EU referendum, dropping from 25% at the beginning of 2016 to just 10% in 2017.
High end homes in central London are being sold with the biggest discounts for ten years. Prices per square foot in London have fallen by 5% since 2014, and in the more expensive ‘prime central’ areas, prices have fallen by 11%. The high value more exclusive areas of London are likely to remain attractive to foreign investment.
The Mayor of London, Sadiq Khan, is seeking measures to ensure that Londoners have first choice of new build homes in the capital, where he has more powers to grant or block planning permissions.
Wealthy buyers are not just attracted to the UK; Switzerland has restricted foreign property ownership since the 1960s and both Singapore and Hong Kong have imposed extra taxes on foreign buyers.
Local property buyers in New Zealand are blaming overseas buyers for escalating property prices that have squeezed locals out of the market. Wellington’s house prices increased by over 18% in the year to June 2017. New Zealanders are now calling for a ban to stop non-residents from purchasing existing residential properties and homes.