Foreign buyers having a marked effect on UK home ownership levels
As a result of increased foreign investment in the UK property market over the last 20 years, house values have risen considerably and prevented younger Brits from being able to buy a house themselves.
Buying a home in the UK is not an easy task for those in the younger generations, with house prices increasing at seven times the rate of wage rises. While many experts often point the finger of blame at the government for their inability to force house-building companies to speed up the construction of homes on purchased land, a new study from researchers at King’s College, London have found that there is another factor that is often ignored in regard to sky-rocketing prices.
As the UK became a powerhouse in the financial sector during the 1980s as a result of then Prime Minister Margaret Thatcher’s commitment to de-industrialisation, London became the de facto place to set up shop for a number of banks and consultancy firms, and ultimately, the individuals who populated their ranks. This influx of money made UK property – especially in the south-east – a sound investment for anyone with the financial clout to purchase them.
From the early nineties onwards, a growing number of these often-wealthy buyers came from overseas, outbidding a large proportion of UK citizens for the premium homes in prosperous neighbourhoods such as Mayfair, Kensington, and Knightsbridge. And while this appeared to be a great outcome for the UK economy, the continued investment has pushed up sold house prices to to a point where younger people can no longer afford them.
The study, carried out by Professor Filipa Sá, found that almost 10 per cent of all homes across the country are now owned by foreign buyers, and if this asset accumulation by affluent non-Brits was discounted from the property market, then the average price of homes across the country would be 19 per cent lower.
While homeowners may be happy to see the value of their homes increase dramatically, issues often arise when they decide to sell. This is due to the older more-wealthy generations being happily settled in a single location with little interest in moving, while younger generations who wish to buy are unable to afford the desired asking prices.
A number of think-tanks have, as a result, criticised the various British governments over the last two decades for their lack of action regarding the imposition of additional tax rates on property purchases from foreign buyers in a similar vein to countries such as Australia, Switzerland and Canada.
While the situation may change once Article 50 is finalised and the UK leaves the EU, for now at least, those hoping to achieve a fast house sale may find themselves having to lower their asking prices in order to move on with their lives.
Looking for a sell your house – fast? Why not ask National Homebuyers for advice, as we buy any house. Call 08000 443 911 or request a call back to find out how much you could get for your property.