After a three-year drop in transactions, international interest has returned to the London property market.
For the first time in three years, overseas buyers are returning to the London property market, despite Brexit, stamp duty revisions, and the pandemic.
According to Henry Dannell, a specialist mortgage broker and protection advisory, the proportion of London property sales to non-residents has risen steadily in the last decade. In 2017, overseas buyers purchased 31,693 properties in London, according to the report. Additionally, this was a 21% year-over-year rise in the amount of market activity.
The market value of these property transactions was £15.2 billion, which was 24.3% greater than the previous year and the highest in the prior decade. Although foreign investment in the capital’s property market has steadily decreased since then.
As new SDLT restrictions for international purchasers were published and the Brexit process neared its conclusion, foreign buyer transaction volumes dropped (by 0.7%) in 2018.
When the worldwide Covid-19 pandemic shut down international travel, preventing many purchasers from accessing the market, the proportion of the market fell by 3.6% in 2020. 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. However, in 2021, foreign interest returned to the capital, with transactions rising by 0.6%. These acquisitions’ market value climbed by 4.8% to just short of £11.4 billion over the same period. Geoff Garrett, Henry Dannell’s director of operations, remarked “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. “However, this 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.
“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.”