AS THE POUND SLUMPS AGAIN, INTERNATIONAL INTEREST IN LONDON’S PROPERTY RISES📷
It isn’t anything we haven’t seen before. The weak pound and stagnant property prices are causing a surge of overseas buyers to snap up discounted British property according to housing market figures.
For those in the UK, a weak pound might make holidays more expensive but, in fact, it could be good for income. Shareholder payouts from British companies rose to record highs of £37.8 billion in the second quarter of the year. A weak pound drove this growth of 14.5%.
If you are embarking on a foreign holiday, a weak pound could increase the cost. But it makes the UK’s exports cheaper in global markets and makes imports more expensive. It helps boost production while driving consumers towards home-produced products. In the long-run, this could help boost the economy. According to the spectator, if we look at the pattern of the sterling value, the troughs, where the pound’s value falls significantly, are often followed by periods of strong economic growth.
What is causing a weaker pound?
As of July 2019, the pound has hit a 27-month low as Brexit uncertainty continues. With looming threats of a no-deal Brexit, the pound continues to fall short, with major sterling slides coinciding with Brexit-related events.
On 16th July 2019, sterling dropped to its lowest level since April 2017 as businesses feared a crashing no-deal exit from the EU on 31st October. The pound was also hit when reports suggested Johnson may seek to suspend parliament, and also when Johnson and Hunt both declared the Irish backstop had no future.
This sliding value of the pound caused widespread concern in financial circles. But, for those in property, the weak pound is bringing opportunity to developers and buyers.
Stagnated house prices
The property market in London isn’t doing much of anything at present. House price growth has stagnated and house purchases are down by 12%. This hasn’t deterred international buyers.
International developers are taking advantage of lower prices and the favourable exchange rates to create good-long opportunities. This isn’t an isolated incident. International developers bought 57% of homes in prime central London in H2 2018, the highest level since the 58% recorded in H2 2012.
Agents report an increased interest in buy-to-let property from Hong Kong, Middle Eastern Countries, and other countries with their currency against the dollar. However, EU buyers have regained their position as the largest group of international buyers in prime central London, purchasing 19% of homes in H2 2018. Whether they will retain their lead during this most recent influx of international interest in London’s property market is yet to be seen in 2019.
A falling pound isn’t all doom and gloom. For those in the UK, it can increase the cost of trips abroad for the time-being, and may require a rethink when it comes to a summer holiday. But shareholders are enjoying increased payouts while international property developers can get their hands on a London property bargain that will likely pay off in the future. It seems, even when the UK’s political and economic status isn’t quite where the country wants it to be, the property market continues to offer reliable opportunities to people around the globe.