New figures indicate that domestic British buyers are flocking to London’s housing market, says Simon Morris.
Market for foreign buyers
The UK capital’s residential property sector, especially its prime central district, has traditionally proved extremely attractive to cash-rich foreign buyers. A recent report from estate agency Marsh & Parsons has revealed, however, that they are beginning to abandon the market – but domestic British buyers are starting to fill the void.
Marsh & Parson figures
City A.M. reported that the proportion of London residential property sales that can be attributed to domestic buyers hit 79% in the third quarter of 2015. This is a 2% rise from the third quarter of 2015, while foreign buyers account for just over 20% of London residential property transactions.
The Marsh & Parsons report also indicates that foreign buyer property transactions in the boroughs of prime central London has dropped significantly in the last year. They accounted for 37% of the market in the third quarter of 2014 – this fell to 34% in the second quarter of 2015, and just 32% between July and September 2015.
Changing market trends
Peter Rollings, the chief executive of Marsh & Parsons, explains that a number of factors have driven foreign buyers out of the higher end of the London housing market, which they tend to favour. He says: “At the high end buyers are at the rock face of the new steeper stamp duty, and from overseas the strength of sterling, and government encroachments on non-dom status make investing in the London property market seem daunting.”
Meanwhile Tom Bill, the head of London residential research at Knight Frank, explains that the revival of the UK’s economy has emboldened domestic buyers. Bill commented that “UK buyers are more active than they were in the aftermath of the financial crisis, which cemented the UK’s status as a safe haven for overseas buyers.” He adds, “the UK economy is recovering more strongly than anyone thought it would and on the back of that we have seen stronger domestic activity over the last 12 to 18 months.”
Pushing up London house prices
Figures quoted by the Daily Mail indicate that the average London house price hit £531,000 (an annual rise of 7.2%) in October 2015. The fact that London house prices keep going up shows that while foreign buyers leave the UK capital’s residential property market, domestic British buyers are only too happy to step in.
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