International buyers have traditionally seen the UK as a safe haven to invest in property. They’ve seen prime UK property perform better than many other assets and also property in other major cities across the globe.
International buyers have historically bought in prime central London, but today they’re increasingly looking beyond the most expensive neighbourhoods. The changes to stamp duty in 2014 and 2016 drove demand to outer London where relatively lower prices mean a lower tax bill and expectations of price growth are higher.
In Q2 2017, international buyers were increasingly likely to buy in London’s suburbs. The proportion of international buyers in up- market suburbs covered by our network increased from 17% in Q1 to 27% in the second quarter of the year.
Price is a driver – the average price in the suburbs is £489,000 compared with £1,758,000 in prime central London. Combined with the fall in Sterling, that may have opened up opportunities for overseas buyers who hadn’t been in the market before. Central London still retains its appeal for many international buyers. Europeans, who almost abandoned prime central London since the Brexit vote, are regaining confidence. The proportion of European purchasers increased by 6% to 15% in prime central London in Q2, retaking their position as the largest group of international buyers.
Regardless of location, currency advantages and a lack of supply in the property market are expected to support demand for international buyers in the UK as they assess the proven historic strength of the investment. Indeed, despite Brexit worries, confidence in London as a place to buy is also reflected in a dwindling number of sellers. The proportion of international sellers in Q2 2017 was 17%, down 3% from last quarter. The number of sellers fell back even more, from 40% of sales in Q1 2017 to 33% in Q2 in prime.