International buyers activity in PCL highest in 5 years, despite fewer EU buyers

International buyers activity in PCL highest in 5 years, despite fewer EU buyers

  • Overall the proportion of homes sold to international buyers in London fell slightly to 31% in H2 2017, a 1% fall on the previous half. This is despite a pickup in international buyers in Prime Central London (PCL).
  • The proportion of homes sold to international buyers in PCL increased to 55% in H2 2017, up 8% on H1 2017 and up 16% on H2 2016 following the Brexit vote. This is the highest proportion of international buyers in PCL since H2 2012 (58%). (Chart 1)
  • The rise was due to a pickup in Middle Eastern buyers, who bought 15% of homes in PCL in H2 2017, up 5% on the previous half.
  • Even though EU buyers still make up the second biggest group of international buyers in PCL, they’ve been gradually withdrawing as a proportion of total sales since the Brexit vote in June 2016. The proportion of homes bought by EU buyers has fallen from 23% in H1 2016 (pre-Brexit vote) to 10% in H1 & H2 2017.
  • Buyers from Asia have also taken advantage of Sterling’s depreciation following the Brexit vote. The proportion of sales to Asian buyers in PCL has risen from 9% in H1 2016 to 16% in H2 2017.
  • The rise in proportion of Asian buyers has been driven by an increase in sales to Far Eastern buyers, particularly in H2 2017. The proportion of sales in PCL to buyers from the Far East rose from 4% in H1 2017 to 8% in H2 2017.

 

Outside of Prime, there’s been little change overall, except for EU buyers

  • In wider central London, the proportion of homes sold to international buyers in H2 2017 fell to its lowest level since H2 2013 to stand at 17%. International buyers seem to be focussing their attention on PCL in search of the most prestige property and biggest hopes for capital appreciation as the market bottoms out.
  • Similarly, the proportion of international buyers in the suburbs & super-burbs fell 1% between H1 and H2 2017.
  • But as with PCL, EU buyers have also withdrawn from the outer areas of the capital. The proportion of homes sold to EU buyers in central London fell to 4% in H2 2017, the lowest value since our records began. This is 7% below the figure recorded in H1 2016 before the EU referendum.
  • This withdrawal from London is despite the exchange rate moving further in the euros favour. Since January 2016 the Euro has appreciated more against sterling than other currencies, giving euro buyers a further advantage. (chart 2) But the fall in EU buyer activity suggests their reticence is more likely to be down to uncertainty surrounding Brexit.