International interest returns to the London property market – ending a three-year decline in transaction levels
Research by Henry Dannell reveals that international buyers are slowly returning to the London property market after three consecutive years of declining market activity, brought about by Brexit, changes to stamp duty and, of course, the pandemic.
We analysed the level of London property sales attributed to foreign buyers and how this has changed over the last 10 years.
The research shows that In 2017, international buyers showed phenomenal interest in London property, accounting for 31,693 property purchases. Not only was this the highest total in the last decade, but it also marked a 21% annual increase in market activity.
At £15.2bn, the market value of these property purchases was also the highest seen in a single year in the last decade and was 24.3% higher than the previous year.
Since then, however, foreign interest in the capital’s property market has been in slow decline.
In 2018, foreign buyer transaction levels fell by -0.7%, before plummeting by -26% in 2019, as new SDLT rules for overseas buyers were announced and the finalisation of the Brexit process approached.
Then, in 2020, the share dropped again, this time by -3.6% as the global COVID-19 pandemic put a halt to international travel, preventing many buyers from entering the market.
As a result, we estimate foreign buyer transactions within the London market totalled just 22,444, with the market value of these purchases sitting just below £10.9bn.
In 2021, however, international interest started to return to the capital, with transactions climbing, albeit marginally, by 0.6%. At the same time, the market value of these purchases has also increased, up 4.8% to just shy of £11.4bn.
Henry Dannell Director, Geoff Garrett, commented:
“Having peaked in 2017, a myriad of factors have led to a decline in international buyer interest within the London property market. As a result, both the proportion of transactions and the total market value of homes purchased by foreign buyers has been on the slide.
However, this tide certainly seems to be turning and the initial green shoots of a recovery across this segment of the market appear to have sprung in 2021. This has undoubtedly been driven by the easing of pandemic travel restrictions and the fact that the political dust has now settled following Brexit.
We expect this recovery to continue over the coming year and with many foreign buyers already securing financial support within their native countries, often at much higher rates of interest compared to the UK, we don’t foresee increasing interest rates to act as a deterrent to the same degree as it will across the domestic market.”
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As featured in City A.M