A rise in foreign prime buys in the capital and a decline in the value of sterling drove the highest level of international purchases for six years, according to Hamptons International.
International buyers accounted for 57% of prime central London homes bought in the second half of 2018.
This was the highest proportion since H2 2012, when foreign purchases made up 58% of PCL home transactions.
Hamptons said the pick up was due to a drop off in UK buyers and a rise in foreign purchases undeterred by Brexit.
EU buyers purchased 19% of PCL homes, compared to 10% during the same period in 2017. At the same time, Middle Eastern PCL purchases dropped from 15% to 8%.
Aneisha Beveridge, head of research at Hamptons International, said: “Sterling’s weakness, making it cheaper for many international buyers, seems to be outweighing Brexit uncertainty when it comes to foreign buyers making a decision on where to buy a home.”
Post-referendum pick up
While the foreign share of PCL purchases has swung between around 40% and 60% since the EU referendum, the share of Greater London homes has maintained a more constant upwards trajectory, particularly over the past three years.
In the second half of 2018, international purchases made up 36% of all home purchases in the region. This compares with 21% in the second half of 2015.
In the wider region in H2 2018, 14% of buyers came from the EU, 12% from Asia and 3% from the Middle East.
The proportion of sales to purchasers from Asia has risen by 7% since H2 2015, with the EU share up by just 3%.
Beveridge noted that the depreciation in the value of sterling meant a home that cost £1m in H1 2016 would today effectively cost £124,409 less for buyers wielding euros in H2 2018. Similarly, a strong dollar would drive a saving of £95,755 compared to pre-referendum sterling highs.
In February, the government launched an open consultation on stamp duty land tax surcharges following proposals of a 1% fee from Theresa May at the Conservative Party conference. The government said: “There is evidence that purchases of property by non-UK residents are pushing up house prices for UK residents.” However, critics have dubbed the plans a “political tool” and say the hikes could deter valuable foreign investment and drive down development and affordable home delivery in the capital.
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