Anyone working in or associated with the high value property market in and around London will know that the capital's top end residential market has seen growth (where other areas of the UK property market have not) due to an influx of overseas buyers looking for a solid investment. A report published last year by Savills, the global real estate services provider, revealed just how much this select market has been dominated by foreign investors.
The report and analysis revealed that international buyers comprised 63 per cent of residential property purchases in the prime new-build market in London and the Home Counties. This is in stark contrast to the situation in 2009 when 75 per cent of purchases in this same sector were by native UK buyers. And when it comes to properties valued in excess of 5 million pounds international buyers make up an even larger majority at 88 per cent.
It is perhaps not surprising that this change has occurred in recent years given both the economic downturn in the UK (and the rest of Europe, of course) and also that London has always been a cosmopolitan city that has been attractive to overseas buyers for a wide range of reasons, not least being the cultural highlights the city offers.
Perhaps what is surprising to observers without in-depth knowledge of this niche market is the speed with which this reversal has occurred. But it is less of a surprise to those involved in the high value London property market and to them it simply corroborates evidence that the market in the capital is very different to that in the rest of the UK even in the major cities and other desirable locations.
Of course, for those British people who already own homes in the capital, even if they are not in the realms of those valued at £5 million plus, there is a knock-on effect that seems to be benefiting all property owners. And for those selling high value properties they are grateful for the overseas buyers and the fact that they are not suffering so much in this economic situation as many others are.
Combined with the continuing desirability of London and all it has to offer this has boosted the prime sector beyond what might have been predicted at the start of this recession.
The non-prime property market in London and surrounding areas, and indeed in the rest of the UK, could certainly benefit from some of the boost in prices that the prime sector has been receiving of late. Certainly a lack of desirable property on the market has helped to at least halt any fall in prices and, whilst this may not be what sellers would have hoped for, it is certainly better than a falling market.
If new home builders continue to seek out and secure sites for new developments this may give the non-prime sector something of the boost that the prime sector has received from overseas buyers. There have been suggestions that there are brownfield sites unused by some of the UK's major organisations such as Royal Mail and the BBC and even some sites owned by the MOD that could be used to build enough new homes to meet demand for the average buyer. In the meantime the high value mortgage borrowers buying prime London property will, hopefully, bring a boost to the rest of the UK property sector and those borrowers without the need for such a large mortgage.