Market Insight - April 2016
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The Push For Home Ownership

  "In 2015 the London Market saw a 3% drop in foreign buyers compared to 2014"    

Sales: International Buyers & Sellers
Exchange rates set the tone.

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In 2015, the London market saw the loss of some of its lustre for foreign buyers, as the proportion in the market fell to 27 per cent – 3 per cent lower than in 2014.

This shift in foreign activity in the market was primarily due to lower levels of activity from Russian, Asian, Australian and American buyers. The proportion of buyers from these fell back to 8 per cent from 12 per cent. Contrarily, the proportion of buyers from the EU increased from 9 per cent to 11 per cent.

Currency movements are likely to be the main factor causing these changes, particularly for Russian and Chinese buyers. Both regions have seen their currencies weaken relative to the pound due to economic woes. China’s economic growth slowed dramatically last year and led to wobbles in its stock market. In Russia, the continued decline of oil prices in 2015 also hit its economic growth and reduced the strength of its currency.

The increasingly higher cost of London homes for Russian and Chinese buyers have seen them move their focus away from prime central London (PCL) to the relatively cheaper areas in the capital. The proportion of Russian buyers in PCL fell by 5 per cent to 1 per cent but increased from 2 per cent to 11 per cent in inner London. Similarly, Chinese buyers in PCL fell by 6 per cent to 2 per cent but increased from zero to 2 per cent in outer London.

There are other factors that might be affecting international investor sentiment too. Lower projected capital growth in PCL and the imminent stamp duty charges on second homes are likely to play a part. The year ahead is becoming an increasingly uncertain investment environment due to slower projected global growth, low oil prices, and the possibility of Brexit, all of which are likely to add to caution, particularly with the threat of further currency fluctuations.

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