International buyers are slowly returning to the London property market after three consecutive years of declining market activity, research by debt advisory specialist, Henry Dannell, reveals. This positive change has been spurred on by Brexit, changes to stamp duty and, of course, the pandemic.
Dannell analysed the level of London property sales attributed to foreign buyers and how this has changed over the last 10 years.
Flashback - a drastic drop in London’s property market
Phenomenal interest in London property was shown by international buyers in 2017, accounting for 31,693 property purchases. This was not only the highest total in the last decade, but it also marked a 21% annual increase in market activity.
The research shows that the market value of these property purchases was also the highest seen in a single year in the last decade at £15.2 billion and was 24.3% higher than the previous year.
Unfortunately, since then, there has been a slow decline in foreign interest in the capital’s property market.
Foreign buyer transaction levels fell by -0.7% before further plummeting by -26% in 2019 as new SDLT rules for overseas buyers were announced and the finalisation of the Brexit process approached.
As 2020 rolled around the share dropped once again, this time by -3.6% as the global COVID-19 pandemic brought international travel to a halt, thus preventing many buyers from entering the market.
As a result, Dannell estimates foreign buyer transactions within the London market totalled just 22,444 with the market value of these purchases sitting just below £10.9 billion.
A turn of events - finally
International interest started to return to the capital in 2021, with transactions climbing, albeit marginally, by 0.6%. Simultaneously the market value of these purchases has also increased, up 4.8% to just shy of £11.4 billion.
Geoff Garett, director of Henry Dannell, commented: “Having peaked in 2017, a myriad of factors have led to a decline in international buyer interest within the London property market. As a result, both the proportion of transactions and the total market value of homes purchased by foreign buyers have been on the slide.”
“However, this tide certainly seems to be turning and the initial green shoots of a recovery across this segment of the market appear to have sprung in 2021. This has undoubtedly been driven by the easing of pandemic travel restrictions and the fact that the political dust has now settled following Brexit.”
Garett concluded: “We expect this recovery to continue over the coming year and with many foreign buyers already securing financial support within their native countries, often at much higher rates of interest compared to the UK, we don’t foresee increasing interest rates to act as a deterrent to the same degree as it will across the domestic market.”