Overseas buyers return to London

As house prices in London continue to rise, many young Londoners are finding themselves struggling to get on the housing ladder.

Estate agent Savills estimates in the last year, as much as 85% of new build property in prime central London was bought abroad.

First-time buyers

Every Saturday open home viewings in parts of east London are drawing large queues of people trying to snap up the limited stock.

“Foreign money is definitely pushing up the price for Londoners,” according to Nadia Elghamry from London Residential Research.

“They come in and have money they want to put in to London as it’s a safe haven. They want bricks and mortar-property”.

An academic study has suggested political turmoil around the world is leading to investment in London property, pushing up prices in specific areas.

According to research undertaken by the Said Business School at the University of Oxford, a political crisis in Pakistan lead to a surge of buying in Southall in west London.

Meanwhile the Greek banking crisis lead to investment in homes in Holloway Road and Kings Cross.

Smart investors

In Hong Kong, British estate agents organise property expos for Chinese people wanting to invest in London.

For buyers there London offers good value for money. “It’s cheap. It’s as simple as that! £300,000-£400,000. People can afford it here and offer to pay cash,” says Hoi Cheung from SMART Property Investment. 

Hong Kong estate agent Victoria Allan says attempts to stabilise the property market there is having an impact thousands of miles away.

“The Hong Kong government has put new cooling measures in place to slow down 'the local property market' and as Hong Kong loves to speculate on property they have grabbed their money and taken it to London.”

This kind of investment, along with a lack of property coming to the market, is making it increasingly hard for first-time-buyers.

Struggle for first-time buyers

Twenty-nine-year old journalist Jess Shankleman has been saving for a deposit for years to buy her own place, but she found herself priced out of Walthamstow last summer.

Now with financial help from her father, she’s compromising on her ideal area to find somewhere she can afford in Forest Gate.

“I think once Crossrail comes to Forest Gate people will realise the value of Crossrail and that you can get to Liverpool Street and Paddington.”

Her father Martin Shankleman, who is also a director of the HomeOwners Alliance, says young buyers from London are being frozen out of the market.

“When I go to a repossessed one bed in Forest Gate and learn a Chinese investor was there yesterday with cash to buy property it doesn’t seem right… It is incredible my daughter is now priced out of Walthamstow.”

Louise Healy and Nicholas Adonis have also been trying to buy a home for more than a year.

Nicholas says “we’ve lived here all our lives and we are shut out from a two bedroom house. The government has allowed foreign investors to come in and take over. London has become a playground for the rich.”

The couple are amongst the hundreds who are seen queuing at weekend block viewings of properties in east London.

This is where dozens of people are shown around a home, then sealed bids are made at the start of the following week, inevitably leaving almost all of the viewers frustrated.

Robin Jerron from Churchill Estates in Walthamstow says it’s to cope with high demand.

“It’s tough for the buyers. We do feel sorry for them. It’s a spill over from other areas – Hackney, Stoke Newington… the property market has rocketed there. So a lot of people are coming from those areas – who can’t afford there.”

Overseas investment

The Mayor of London, Boris Johnson, has been a champion of overseas investment in the London property market, arguing the money has driven new development.

But in a speech in January, he said his first concern is homes for Londoners: “I do want to see these homes marketed first – or first equal – to Londoners. Isn’t that reasonable?

"I also hope international investors will understand that we want to see new build homes that they buy lived in. My view is that London homes aren’t some sort of new global asset.”

In his autumn statement, the chancellor George Osborne announced that foreign buyers would have to pay tax on the value added to UK properties they own for the first time.

Mr Osborne said: “It's not right that those who live in this country pay capital gains tax when they sell a home that is not their primary residence - while those who don't live here do not."

But Miles Shipside from RIGHTMOVE thinks the situation is unlikely to improve anytime soon for first-time-buyers in London.

“Nationally you need first time buyers but London is pretty unique. The first time buyer has been replaced by the investor – both overseas and UK based.

"First time buyers are important to build chains – I’m afraid in London a lot less.”

Source:  BBC website 23/05/2022 .bbc.co.uk/programmes/n3cswk9z