After three years of decline in the London property market due to Brexit, changes to stamp duty, and, of course, the pandemic, international buyers are returning to the market. The capital has seen a resurgence of foreign interest since last year, with transactions rising by 0.6%. Additionally, the market value of these transactions has risen by roughly $11.4 billion, an increase of 4.8%.
London Property Market Leaving its Rough Years Behind
International purchasers made up a sizable portion of the city’s 31,693 home sales last year. There was a 24.3% increase in the market value of these property transactions to £15.2 billion, which was the most in a year in the prior decade. A 21% year-on-year rise in market activity, according to Henry Dannell’s Geoff Garrett, director of debt advisory company Henry Dannell, was also reported by City A.M. today. His company analysed the percentage of London property sales ascribed to overseas purchasers over the last 10 years.
Garrett stated: “Having peaked in 2017, a myriad of factors have led to a decline in international buyer interest within the London property market. As a result, both the proportion of transactions and the total market value of homes purchased by foreign buyers have been on the slide.” The tide certainly seems to be turning and the initial green shoots of a recovery across this segment of the market appear to have sprung in 2021. “This has undoubtedly been driven by the easing of pandemic travel restrictions and the fact that the political dust has now settled following Brexit.”
London in the Pandemic Market
It’s been a gradual slide since 2017’s high year for foreign interest in property in the capital.
New SDLT requirements for international purchasers were revealed just as the Brexit process was nearing its conclusion, which resulted in a drop (of 26%) in foreign buyer transaction levels in 2019. As the worldwide Covid-19 outbreak put an end to international travel in 2020, many potential purchasers were unable to join the market, and the market’s share fell (by 3.6%) once again. There were just 22,444 purchases made by overseas buyers in the London market last year, with a value of slightly under £10.9 billion, according to Henry Dannell.
According to figures from the previous year, however, “We expect this recovery to continue over the coming year, and with many foreign buyers already securing financial support within their native countries, often at much higher rates of interest compared to the UK, we don’t foresee increasing interest rates to act as a deterrent to the same degree as it will across the domestic market,” Garrett concluded.