Will overseas investment into UK property continue at the same rate as recent years as we career towards the Brexit deadline? Our REalyst analyses the future of overseas investment into UK properties and weighs up the chances.
Overseas Investment in the UK Property Market
When discussing the future of the UK property market, it is nigh-on impossible not to mention Brexit. The word itself has became part of the cultural lexicon faster than LOL – though some may use LOL to describe how Brexit is currently being handled. (Not us, of course! We’re impartial.)
Anyway, we digress; it is not for us to comment on how the government navigates Brexit. Instead, we are looking at what impact Brexit and other trends in the market will have on the future of overseas investment in the UK property market.
Many foreign investors purchase property in the UK – especially new builds in larger cities. This investment goes some way to supporting current price levels for these new builds. But what if that overseas investment were to see a drop in pace, perhaps due to a fall in the pound’s exchange rates or problems in their local economies? Such support for the UK market would likely stagnate.
The Impact of Foreign Investment on the UK Property Market
Foreign investment has a direct impact on property prices in the UK. A recent study from King’s College London using Land Registry data found that house prices have gone up by more than 20 per cent in the past 15 years due to overseas investment into UK property.
Findings from this study revealed that the average property price in the UK in 2014 was £215,000 compared to 1999’s average of £70,000. The report showed that without foreign investment, average house price in 2014 would equate to £174,000 – that is £41,000 less than the actual total.
The majority of foreign investment is concentrated in London. However, these investors are starting to expand their horizons and look at other major UK cities such as Manchester, Liverpool, Cardiff and Edinburgh – areas that are also highlighted in January’s Market Moveras residential yield hotspots.