Demand in London property from foreign investors is at “new levels” as they rush to make the most of the weaker pound.
The pound steadied in early trading in Asian markets on Tuesday, recovering ground slightly from the record low of 1.0327 against the dollar on Monday morning.
Sterling was standing at around $1.08 early on Tuesday but this is still significantly lower than before chancellor Kwasi Kwarteng’s mini-Budget, which sent the currency spiralling last Friday.
One London estate agent, Chestertons, has said that the dip in the value of the pound has driven interest from overseas buyers, who can now get more with their dollars.
“London already attracted overseas buyers back to its property market since the easing of travel restrictions but the weaker pound is taking demand from foreign investors to new levels,” Matthew Thompson, head of sales at Chestertons, said.
“Bearing in mind the dollar’s beneficial exchange rate against the pound, our branches have registered a particular boost in buyer enquiries from US citizens or residents of country’s where the dollar is a primary currency.”
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He continued: “To maximise the saving that can be had due to current exchange rates, buyers are especially drawn to some of London’s priciest neighbourhoods such as Knightsbridge, Mayfair and South Kensington.
“Only 6 months ago, a property that is on the market for £4million, would have cost around $5.23million. At the current exchange rate, the same property costs around $4.32million which is a saving of almost $1million.”
Rory Penn, head of London sales at Knight Frank, said that there has been “a pick up from international buyers who see a buying opportunity in London.”
“US buyers are either looking for best-in-class turnkey residential development or family houses and apartments,” he said, “particularly lateral space with high ceilings and period features.”
Arthur Lintell, who works in Knight Frank’s Notting Hill office, said that the North London residential area had seen particular interest from US buyers.
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“Favoured amongst Americans, Notting Hill has seen a recent surge in interest from US or dollar pegged buyers all keen to take advantage of the recent buying window,” he said.
“One in particular, an ex-Notting Hill local who relocated to New York 15 years ago, is now returning, as the opportunity is too good not to miss as their children start Notting Hill Prep next year. In their words: ‘The timing could not be better for us right now’.”
Naeem Aslam, chief market analyst at AvaTrade, said: “Given the weakness of the British pound, we may see foreign investors buying property in the UK as the currency has depreciated that much. For many, this could be a once in a lifetime opportunity.”
In an attempt to steady the markets on Monday, the Bank of England said that it “will not hesitate” to raise interest rates. However the pound fell after the joint statements from the Bank and its governor Andrew Bailey amid concerns that they had ruled out an emergency rise in rates.
The next interest rate decision is scheduled for 3 November.
Following the fall in the pound, some mortgage deals have been withdrawn by banks and building societies. Virgin Money and Skipton Building Society halted offers for new clients and Halifax said it would stop mortgages with product fees.
By Holly Bancroft
Source: The Independent