Number of overseas investment buyers in London overestimated, new research suggests
Overseas investors buying property in London to let out rather than live in only account for an estimated 7% of all greater London residential transactions, new research shows.
Reported high rates of overseas buying are due to high investor activity in the prominent new build sector which accounts for less than 10% of all London transactions,’ according to the report from international real estate adviser Savills.
It says that it is due to London’s cosmopolitan nature, which results in a high proportion of foreign residents and a large number of foreign buyers in the city’s housing markets.
Savills also says that the while in the most reported, prime, second hand markets, international buyers account for 32% of all sales, just like domestic buyers some 88% are buying a home in which to live.
The report points out that the appeal of London’s residential property to international buyers, whether investors or end users, is a reflection of their widespread interest in other types of investment too.
Over the past four decades, London has been promoted from national capital to premier league global city, becoming one of the world’s most successful cities on a range of economic, cultural and social measures and a destination of choice for residential investment, it adds.
Inward migration and natural population growth boosted London’s population from 7.3 million to 8.2 million between 2001 and the 2011 census, with expectations that it will rise by a further million by 2021, the fastest rate of growth ever.
In the report Savills says that rising house prices are an inevitable consequence of rising levels of affluence and high levels of competition for a limited supply of homes. The shortage of homes, rising house prices and consequent exclusion from the market of many aspiring home owners are all highly contentious issues, but it is wrong to hold an influx of buyers from overseas responsible it adds.
International buyers account for a larger share of the central London, prime and new build markets. The report suggests that figures from these specialised markets have often been erroneously applied to the whole market.
The firm’s analysis suggests that international buyers have accounted for around a third, 32%, of the prime London market which accounts for the most expensive 8% of London sales over the past 18 months.
‘Even in these prime markets, domestic buyers outnumber international buyers by over a wide margin,’ said Yolande Barnes, Savills world research director.
‘Our analysis demonstrates quite clearly that these are not buy to leave owners as popular myth suggests and the majority are resident buyers, especially in the second hand market,’ she added.
While most international buyers are buying a main residence, the remainder are almost evenly split between those buying second homes for themselves of their family to use, for example when on business or studying in London, and those who are investing for rental income.
The split for 2013/2014 shows that 68% are UK buyers, 20% are international buying a…