UK Housing Market Ripe for Overseas Buy-to-Let Investment
With good-value property prices and rental growth exceeding wage growth, UK houses are attracting huge interest from overseas investors.
Read on for more information on how this affects buy-to-let property markets in the UK.
How Many Chinese Investors Want to Buy UK Property?
Chinese investors are getting into overseas property investment in a big way, according to Juwai IQI.
The property portal states that the top four destinations for overseas investment are English-speaking countries: the United Kingdom, the United States, Canada and Australia.
Juwai IQI indicates a massive increase in overseas property investment enquiries among Chinese investors. In Q3 2023, Juwai IQI saw a 76% increase in interest in buying UK property as a non-resident to Q2. In addition, those figures were 35% higher than Q1.
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How Are Chinese Investors Spending Their Money in the UK?
According to Juwai IQI’s email newsletter, these Chinese investors are from an upper-middle-class background and are interested in buying townhouses and apartments.
It’s easy to see why.
Some of the UK’s major cities are seeing huge rises in rental prices for city centre apartments.
City Residential Estate Agents state that the average rental price for apartments for sale in Liverpool City Centre has increased by 12%. Meanwhile, property price growth has slowed due to low activity in the market, making UK property investment both attainable and lucrative for overseas investors.
Why Do Foreign Investors Want to Invest in the UK Property Market?
So, why would a Chinese investor want to purchase property in the UK?
According to a report by Irwin Mitchell, the country has an international reputation as a ‘favourable and open global destination for investment, offering a robust legal framework and business-friendly environment, despite recent economic and political changes’.
As such, foreign investment is rising throughout the UK. Activity in 2022 was substantially higher than in previous years. An influx of Chinese property investors is highly likely in 2023 and beyond.
Interestingly, overseas investment in the North West property market is up by 20% over pre-pandemic levels, with investors looking to cities like Manchester and Liverpool thanks to their local infrastructure, local skills and regeneration plans.
The North West currently leads the way for capital growth projections. Savills predicts an 11.70% capital growth in the region between now and 2027, meaning property investments stand to see substantial appreciation during that period.
According to the HM Land Registry UK House Price Index, the average property price in the UK costs £291,044. However, the average property price in Liverpool is £180,268. Liverpool – and the North West region – offers better value property investments than many other places in the UK.
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Huge Rise in Chinese Buyers Over the Last Year
Earlier this month, Juwai IQI saw a huge increase in Chinese spending on overseas property, reaching $3.4 billion – $1 billion more than in 2022.
Juwai IQI attributes this growth to “revenge buying” – when buying rates rise rapidly after a period where investors cannot purchase due to restrictions or difficulty.
According to an EY report, the number of households that can afford to invest in property in China is set to rise by 50% in 2025. In addition, Chinese consumers have typically high savings rates, while investors are also moving to diversify their investment portfolios.Why not read the Rwinvest Top UK Cities for Overseas property investment report for futher insights.
With UK property price growth down to 0.2%, gross rental yields continuing to rise, and property prices not expected to go up until 2025, we can expect to see more foreign investors purchasing property on UK shores in the near future.
By Dale Barham