Now that Covid travel restrictions have been lifted, a luxurious property in London has once again risen to the top of the shopping list for wealthy international buyers.
During the first six months of this year, buyers from overseas purchased 48% of homes sold in Prime Central London. This is a 13% increase from the low of 35% seen in 2021, when Covid-19 regulations were still in force, and means the proportion of international buyers has surpassed the 45% figure seen in 2019, before the pandemic hit. However, foreign buyer numbers are still below the peak of 55% recorded in 2018, when sterling was weak.
Although it bounced back last year, sterling has since depreciated against the US dollar, to which many other countries’ currencies are pegged, and also against the Chinese yuan. This has meant many buyers based abroad have been able to get more for their money in 2022. A buyer purchasing a £1m house with US dollars is likely to have saved £66,000 compared to last year, purely down to currency changes, while someone paying in yuan will have saved almost £58,000.
The biggest increase over the past year has been in buyers from Asia, with purchasers from Hong Kong, India and China pushing the total up by 7% to 14% of all purchasers in the capital’s most exclusive areas. This is 5% higher than in 2019. The proportion of US buyers has risen by 3% since 2021 to 5% now, which is higher than the 4% level recorded three years ago.
Buyers from Europe have also increased in Prime Central London – from 13% last year to 16% now, meaning they are back to pre-Covid levels. This is despite the fact currency movements have acted against those purchasing a UK property with euros, making a £1m house £19,000 more expensive than in 2021.
Before the pandemic, Middle Eastern buyers made up one in ten of all those picking up properties in the capital’s priciest postcodes. Their numbers have dropped by 3% to 7% today.
Across Greater London, domestic purchasers make up the vast majority of buyers. Before Covid struck, international purchasers accounted for 27% of all sales. Last year this fell to 23% and dropped to a record low of 21% in the first half of 2022.
A gloomy economic outlook for the UK forecast by the Bank of England last week is likely to coincide with a further depreciation of the pound, at least against the dollar. While bad news for Brits importing goods into the UK, it could be good news for international buyers purchasing property here.
London property has long been seen as a hedge against inflation, and despite a sluggish few years for price growth in London’s priciest postcodes, activity is now picking up pace. At a time of uncertainty, rising prices are likely to attract attention and may encourage a few more foreign-based buyers into the market over the coming months.
