Overseas buyers snapping up 15% of London's new homes
Published by Max Salsbury for 24dash.com in Housing
Up to 15% of new housing in London was purchased by overseas buyers last year, a report has revealed.
And the ‘Who Buys New Homes in London and Why?’ report, commissioned by the British Property Federation, shows that 49% of the new property in prime central London was bought by foreigners, compared to 20% in inner London and 7% in outer London.
The report also reveals that 39% of the capital's new build homes were bought by owner occupiers and 61% by investors in 2013. The majority bought the homes to let, accounting for 48% of all purchases. Additionally, most of the properties that were bought to sell ended up as rental stock.
Liz Peace, BPF chief executive, said: “We shouldn’t forget that we are just emerging from the worst recession since the Great Depression. The last few years have been difficult for housing providers, with housebuilding, lending to the sector and mortgage availability all dropping off a cliff. Accordingly the industry, like any manufacturing industry, has had to diversify into new markets. Investors looking to pre-fund new developments have helped get projects off the ground and kept people in jobs.
“Raising capital to fund any type of development has been very difficult over the past few years, so that those who helped keep development going, including investors, during that time should be congratulated not pilloried. Accordingly, as the economy starts to stabilise, owner occupation levels are likely to rise.
Separately, the study looked at rental demand in recently completed developments. Across 107 developments in London, there were no cases where tenant demand was considered low. In light of the strength of demand in London’s rental market, the BPF has welcomed findings that the majority of the flats bought as an investment are returned to the market, therefore satisfying the demand for rental homes.
The fledgling build to rent sector is also starting to make a contribution to the capital’s housing need, with 8% of homes delivered for the private rented sector.
The report predicts that the market will shift, in the short term at least, towards a 50:50 owner occupier and investor relationship during 2014.