Investing in London
Some of the high-end buyers are investing in London real estate before the Brexit conclusion. The stagnating UK market picked up in the last month due to growth in incoming EU investors. The sale of homes in London rose 44 percent – for high-end properties of value more than 20 million pounds. Savills claims the property transactions are even growing outside London with 3 percent more than last year's rates.
The rise in full-time employment and supportive labor reports leading to growth in earnings are inviting new buyers to the property markets but the prices are also increasing, due to greater investments of the foreign buyers in some of the key cities of the UK. At least 50 percent of the UK buyers are first time home seekers, who are widely hit by the high rise in price by 21 percent (as per Halifax data). For first time buyers, the rates grew 48 percent since 2008 and deposits increased radically, while, the purchase price grew 27 percent – which is one of the all times highest.
South East rates grew 37 percent, and North and Wales rose 9 percent in the decade. East Anglia prices grew at a rate of 30 percent.
After the announcement of Brexit, the number of EU buyers had decreased by 8 percent in 2017 as compared to 2016 but now these buyers are returning to London properties. Foreign buyers are buying at least 2 out of 5 properties in the UK – according to the first half data of 2018.
Foreign buyers are investing in London properties where the ratio grew by 2 percent this year as compared to 2017, as per Hamptons International stats. In the second half of 2017, properties going to foreign buyers were 35 percent. Tax changes reduced foreign investment in Q1 2018 and the properties in Central London, Chelsa, Mayfair, and Kensington suffered tax issues, especially, the high-value properties. For any EU buyer the rate of 1 million pound property, in 2016, has reduced (in the range of £ 800,000 to £ 900,000) due to new sterling rates and hence, the properties are 10 percent cheaper now, in the UK. European buyers are returning to London to profit from a weaker pound. The number of houses sold to EU buyers rose by 13 percent in the first six months 2018 -10 percent more as compared to 2017 – Hampton International.
BoE raised interest rates recently, and a low number of landlords are renting their properties due to tax issues. Such conditions will cause a rise in rents in the coming years. The total number of transactions reduced in the first half but the presence of European buyers led to growth in real estate. At least 15 percent of the home buyers who bought properties in central London in 2018 H1 are European buyers. Scarce supply favors investors and population growth in some regions (Frankfurt, Manchester, and others) raises the scope of rental growth in certain areas in the UK.
To find out more about new opportunities in the UK real estate markets, click Hamilton International Estates (www.hamiltoninternationalestates.com).