Currency discounts drive London market
A new report from residential agency, Hamptons International and currency specialists, currencies.co.uk, shows that a weak pound due to Government austerity measures, a struggling UK economy and continued low interest rates, has created significant exchange rate advantages for foreigners, with 72% of buyers in prime central London from overseas.
Despite prime central London prices being pushed beyond the previous peak levels of summer 2009, significant discounts are still available for international buyers, particularly for Japanese buyers (35.8% saving) and those trading in dollar or dollar-pegged currencies (20.08% saving). For example, a property worth £5m in a domestic market equates to a £1.79m saving for those paying in yen or £1m saving for those paying in dollars.
The influx of international buyers to the Capital keen to exploit the exceptional value of the prime central London property market has impacted domestic purchasers, who are finding it increasingly difficult to make the sums work. According to Hamptons International’s central London branches, just 28% of properties are currently purchased by British buyers. This compares with more than 40% prior to the market downturn.
Replacing British buyers are primarily Europeans (28%), Chinese and Far Easterners (13%) and Middle Easterners (10%) keen to take advantage of a mature and established property market such as London.
Andrew Phillips, director at Hamptons International, commented: “Russian, Middle Eastern and Chinese buyers have long been regulars on the prime central London property market scene.
“Significant currency advantages have further encouraged these buyers to look to London property, whether it’s for investment or to expand their personal property portfolio, making London the world’s capital city.
“While British buyers have been squeezed by the foreign interest, we are expecting to welcome back domestic purchasers with the advent of bonus season, which is anticipated to reach £7bn this year.”