International buyers upped their stake in London’s prime property market last year for the second year in a row. The proportion of homes in Prime Central London (PCL) purchased by an international buyer increased from 39% in 2022 to 45% in 2023, back to the levels seen pre-Covid in 2019.
This rise comes at a time when domestic buyers – hampered by rising mortgage costs and economic uncertainty - have been less active. Many international buyers use cash to pay for their London base or investment property, which meant that higher mortgage rates were less of an issue than for domestic purchasers. Those who are reliant on some form of mortgage finance often take this out in their home country where rates may have been more stable last year.
Buyers from the European Union and Asia were the driving force behind this resurgence. Meanwhile, Hamptons data suggests a tapering interest from Middle Eastern buyers and Americans.
European buyers remained the biggest group having purchased 18% of homes sold in PCL last year, up from a six-year low of 12% in 2022. This puts the share of homes bought by Europeans back in line with the pre-Brexit average.
Meanwhile, buyers from Asia increased their share from 9% to 13% in 2023, the highest proportion in six years. The revival of Asian buyers in the London market comes after a number of quiet years when Covid travel restrictions made purchasing a property in the UK difficult. However, the reopening of China and Hong Kong has seen buyers from Asia return to London with renewed vigour. This comes at a time when property prices in both China and Hong Kong have been falling more than in the UK, dissuading investors from spending their money locally.
Chinese, Hong Kong and Indian buyers all recorded an uplift in 2023, despite sterling’s appreciation making it more costly for this group to purchase property in the UK. The launch of a more generous visa programme for Hong Kong residents has played a role too. Since 2021, there have been over 86,000 applications to the scheme. These buyers aren’t just focusing their search on PCL but are also buying in more affordable parts of London as they seek to put down roots.
Hong Kong buyers made up 11% of all international buyers purchasing a home in Greater London last year, the same proportion as in 2022, but double 2021’s figure when the visa programme was launched.
Across Greater London, domestic buyers continue to dominate and international purchases remain muted. Overall, international buyers purchased 24% of homes sold across the capital last year, fractionally up from an all-time low of 23% in 2022, but well below the 35% peak recorded in 2017.
Looking ahead, more economic stability and falling mortgage rates could unlock a few more domestic moves in the capital this year. However, a strengthening economy, rising house prices and higher yields as London begins to outperform the regions, could also lure more international investors into the market in 2024.
