International money bolsters central London property boom
INTERNATIONAL cash is flooding into the London property market, as foreign buyers capitalise on weak sterling, a report released today by Cluttons claims.
The property consultants predict a 3.2 per cent annual increase in prime central London house prices, driven by cash buyers – in turn driven by the weak pound.
Compared to the 2007 peak, buyers from the Middle East now face discounts of some 30 per cent thanks to favourable currency rates, while those from the Far East find prime house prices as much as 60 per cent lower.
“The prime central London property market continues to buck the national trend,” said Sue Foxley, Cluttons’ head of research. “Strong annual growth is forecast in spite of significant downward pressure on prices.”
Foxley said that as well as international demand, there was upward pressure on the market from both first-time buyers and due to the Bank of England’s funding for lending scheme (FLS).
“A growing mortgaged first-time buyer market means that we are likely to see increased competition for properties at the lower end, which will have a far reaching effect on the whole of the supply chain,” Foxley said. “FLS also appears to be re-energising the debt financing market.”
The report threw cold water on the idea of an Olympic rental boom, saying that the expected boost from tenants simply did not materialise.
And Cluttons expect a one per cent retrenchment from the “unsustainable” growth in the rental market seen in 2012.