Central London property features disproportionately in coverage of the housing market because PRs, big-name agents and top money are all there, yet the capital’s drawing power for overseas buyers remains fascinating. But what does it mean below the surface?
In recent days I’ve spent a lot of time with top-end central London agents. Get under their skin and you see some fascinating insights into how small (yet incredibly influential) this market is, and what it means - if anything - for the rest of the UK.
- Reports of large numbers of overseas buyers can easily be exaggerated: many Arab buyers, for example, have ‘runners’ making enquiries for them at multiple estate agents. Therefore one buyer wanting one home can effectively be reported as several buyers enquiring at several agencies;
- Overseas buyers often purchase a home and then effectively take it off the market for a generation or more - typically because many owners pass it to other family members instead of selling after seven to 10 years as is the norm for ‘domestic’ owner occupiers;
- Of those relatively few overseas owners disposing of their properties on the open market, many sell to other foreign purchasers. This means there is much less ‘ripple effect’ of money being realised by domestic sellers who then move to, say, the Home Counties and ‘ripple out’ the central London wealth;
- The consequence of all this is that the supply of homes to buy in prime central London locations is very small - making it highly likely the stellar price rises of recent years will continue;
- Agents are split about whether the UK’s Euro veto will make London appear a safer, or less safe, haven for overseas wealth. Many say foreign purchasers worry the UK parliament does not have the ‘firm government’ one party rule which characterised it for decades until recently and which was an attraction to foreigners fed up with coalitions, civil disturbances and economic uncertainty in their own countries.
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