The special relationship is a term often used to describe the political, social, diplomatic, cultural and economic ties between the UK and the US. For increasing numbers of Americans, these links are one of the key reasons for increasingly buying property in London’s most expensive areas.
The proportion of homes purchased in prime central London (PCL) by American buyers more than tripled last year to 7%, from 2% in 2021. As well as the desire to have a European base, this uptick was mostly driven by the strength of the US dollar against sterling, which nosedived in the wake of the mini-Budget in September 2022. Due to these currency moves, a home that cost £1m in 2021 effectively cost a US buyer £900,000 in 2022, 10% less.
Of all the homes sold in PCL in 2022, 39% were purchased by international buyers. This is up from the low of 35% in 2021, when Covid restrictions were still in force, but is still far below pre-pandemic levels. Between 2015 and 2019, the share of homes bought by overseas buyers averaged 48%, peaking at 55% in 2018.
The biggest group of international buyers in PCL are those from the EU, accounting for 12% of sales in 2022, but this proportion is down from 13% in 2021 and 16% in 2019, before the pandemic. Middle Eastern buyer numbers are also down – from 10% in 2019 to 7% last year.
In response to the government’s British National Overseas (BNO) Visa programme, there have been more Hong Kong buyers in London’s most exclusive areas. Their share of sales doubled to 4% in 2022, from 2% the year before. Also, given the Hong Kong dollar is pegged to the US dollar, these purchasers have benefitted from currency savings too.
It’s a different story in Greater London, which continues to be dominated by domestic demand. The share of homes there bought by international buyers remained flat at its record low of 23% in 2022 (it also stood at 23% in 2013), significantly below the recent peak of 35% seen in 2018.
While European purchasers remain the biggest international group in Greater London as well, their share of sales fell for the third consecutive year. In 2022, they accounted for 9% of all buyers, down from 10% in 2021 and 13% in 2019. The last time the proportion of EU buyers was so low was in 2017, the year after the Brexit referendum. Currency changes have also made buying in the UK slightly more expensive for EU buyers – the euro is down slightly against the pound, meaning that a property that cost £1m in 2021 effectively cost a euro buyer almost £9,000 more in 2022.
The share of Middle Eastern buyers in Greater London also dropped a percentage point, accounting for 2% of home sales last year. The gaps were filled by two groups who each gained a percentage point share: Hong Kong purchasers, accounting for 3% of sales, and Americans, with 2%.
