We see strong demand from overseas buyers
A softening property market in the UK, as a result of higher interest rates and rising living costs, presents buying opportunities for foreign investors in UK property. The London property market in particular has a long history of medium term price growth, largely due to long term demand for housing outstripping supply (the pace of new property development), so a softening market may be just the time to negotiate a deal.
The opportunity to strike a deal, combined with a weaker pound, gives non-UK property investors an opportunity for a significant discount to the cost of purchasing UK property a couple of years back.
We have seen this reflected in our conversations with business introducers who, despite being quieter with domestic buyers, have continued to be busy with foreign buyer enquiries. It's been reflected too in our own business volumes which were more than 50% higher in the first six months of 2023 than the same period in 2022.
Knight Frank recently confirmed this trend suggesting that "The number of new prospective buyers in London over the most recent four-week period was 24% above the five-year average."
Good news for landlords!
It's likely that residential property prices will remain subdued in the near future as rising interest rates make affordability buyers more difficult, this could be good news for overseas buyers who generally let their properties as an increased demand for rental property is already driving up rental yields for landlords. The office for National Statistics reported a 5% increase in May 2023 for London rents, the highest rate of increase for more than seven years. This looks set to continue as landlords recover increased costs hitting them and react to the increased demand for private rental properties.
Increased rental yields of course make purchase more viable for landlords and those with a long term view may benefit from capital gains once property prices begin to strengthen again.