International investors continue to buy fewer London properties

International investors continue to buy fewer London properties

Overseas buyers are looking elsewhere within the UK for investment opportunities after the London property market slows in comparison to other cities.

  • International investors’ interest in London property has declined from 25% last year to 21% in the third quarter of 2015
  • Strict regulations and stamp duty have deterred investors from buying prime property in London
  • Other areas of the UK are beginning to enter a growth curve that offer more appealing returns than those in the capital

International investors are leaving the luxury London property market as more attractive opportunities become available outside of the UK.

Having dominated the market in recent years and pushing the average price of property in the capital to £499,997, investors from overseas are leaving the London property market for better returns in other regional cities across the UK.

According to a report by estate agents Marsh & Parsons, the number of property purchases by international buyers dropped to 21% during the third quarter of 2015, down from 25% a year earlier.

The overhaul of stamp duty, making it more expensive for investors who own higher value properties, has had a direct effect on the London market.

Peter Rollings, Chief Executive of Marsh & Parsons, said: “The London property market has had to grit its teeth and bear the brunt of some rather trying taxation changes in recent months. At the high-end, buyers are at the rock face of the new steeper stamp duty, and from overseas the strength of sterling, and Government encroachments on nom-dom status make investing in the London property market seem daunting. This has cast some shadows over the capital.”

Investors who bought a London property two decades ago will have felt the benefit of entering the market before the growth curve. The average house price within the capital in 1995 was £126,295, rising to £611,340 in 2015, an incredible 384% increase. However there has been an evident downturn in recent years, with an affordability ceiling deterring first-time or cautious investors from entering the London property market.

The importance of recognising and entering an emerging market has led investors to look outside of the capital and the surrounding commuter belt. Growth is currently being felt most in UK regions. Earlier this week it was found that the highest rates of annual house price growth since 2007 were focused in Glasgow, with prices up 8.3%, Manchester up 7% and in Liverpool up 5.1%. These cities offer investors a far more promising platform than that of London, with solid returns, a backdrop of economic growth, increasing population and targeted government initiatives.

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