Plummeting London sales and flat house prices fail to deter foreign buyers

Tom Belger
·Finance and policy reporter
Updated
A row of houses in Stanley Gardens, in Notting Hill, London, where a house is currently for sale for over �11 million. The borough of Kensington and Chelsea is one of the most polarised in Great Britain, with some of the most expensive real estate in the UK just a short walk from several of the most deprived wards in the country - including the area around the Grenfell Tower. Picture date: Wednesday July 12th, 2017. Photo credit should read: Matt Crossick/ EMPICS Entertainment.
London's property market is attracting foreign buyers again. Photo: Matt Crossick/ EMPICS Entertainment

Foreign buyers are returning to London property despite the subdued state of the housing market, according to new figures.

Property prices are still falling in Greater London, with the latest LSL/Acadata house price index showing a 0.2% annual drop in April.

Sales have also plummeted in and around the capital, down 12% in the three months to April compared to the same period in 2017.

But foreign buyers “have returned in numbers” to the London market, according to a report by Peter Williams, Acadata’s chair, and John Tindale, its housing analyst.

International investors are taking advantage of lower prices and favourable exchange rates as they bet on future growth, “taking the view that this is a good long-term investment.”

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The market is also picking up among British buyers and sellers, particularly “those prepared to take a risk or who must move,” according to the report, released on Monday.

With Britain’s scheduled exit from the EU delayed from March of this year to October, and no end in sight to the political crisis, people are “taking the plunge” to buy or sell.

“With seemingly no immediate end in sight to the political situation in Westminster, there is some evidence that pent-up demand held back by events of the last few months is breaking through,” the report said.

Record levels of employment and recent wage growth will also give some households more buying power, amid strong competition in the mortgage market and low interest rates, according to the report. But it notes many would-be buyers are still struggling to get a mortgage.

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The rate of decline in property prices in London has narrowed significantly as demand has risen over the past few months.

In February, prices were 3% down on a year earlier, but by April this year the decline had dropped to just 0.2% on April last year.

Sales volumes are also down across England and Wales compared to 2017, but up 3% on 2018.

English and Welsh figures for house prices show prices ticking upwards 0.3% over the year, a rise of around £1,000.