US investors exchange rate

Spike in interest from US investors as UK property holds its appeal

Estate agents are noting a flood of enquiries from US investors who are keen to back the UK housing market while exchange rates remain favourable.

US investors are saving thousands or even hundreds of thousands of dollars at the moment when they purchase property in the UK, due to the ongoing depletion of the pound against the dollar.

It remains to be seen whether the incoming Prime Minister Rishi Sunak will have a stabilising effect on the economy and the markets, providing a boost to the country’s currency which fell to an all-time low against the dollar in recent months due to political uncertainty.

One London-based estate agent has revealed that property in the capital is in high demand, particularly among overseas buyers whose primary currency is the dollar. Investors are able to make some big savings, adding to the appeal of the country’s housing market – which has proven its resilience through tough times.

Cash buyers and US investors see better value

Cash buyers are another investor type that might fare better in the current climate, particularly as mortgage rates continue to rise amid heightening inflation.

Richard Davies, managing director of London-based estate agent Chestertons, says: “With more and more office based workers migrating to the capital, including from overseas, properties across the inner London boroughs are especially sought-after.

“This high demand and shortage of available properties being listed is driving up prices. More recently, the weakened pound has also attracted an influx of overseas investors and cash buyers to central London.”

Some of the more expensive areas in particular have been the target of a number of US investors, due to the better value of money that many can achieve at present.

Davies adds: “With the dollar’s beneficial exchange rate against the pound, our branches registered a particular spike in buyer enquiries from US citizens or residents of countries where the dollar is a primary currency.

“To maximise the saving that can be had due to the exchange rate, buyers have been drawn to some of London’s most prestigious neighbourhoods such as Knightsbridge, Mayfair and South Kensington.”

He points to the fact that, due to the current exchange rate, a property on the market for £4m six months ago would have cost around $5.19m, whereas it would now equate to around $4.44m; a saving of more than $750,000.

Where is the housing market headed?

The latest Halifax house price index for September showed a 9.9% annual price increase, which is a clear slowdown from previous indices. It recorded a very small monthly house price dip of -0.1% compared to August’s figures.

The house price inflation witnessed over recent years has been significantly above the historic average, and Kim Kinnaird, director at Halifax Mortgages, says this is an important point to consider when looking at the current context.

While US investors and other overseas buyers continue to be attracted to the UK property market, the same is said for many local buyers who are taking the long view with their purchases.

According to Tom Brown, managing director of real estate at Ingenious, despite the threat of rising interest rates and inflation, alongside political and economic uncertainty, the country’s residential housing sector is expected to remain “robust, resilient and performing well”.

He adds: “The picture is not uniform across the country and all price points, however, requiring expertise to interpret the headline numbers. When analysing residential opportunities, it is key to understand the subsectors and regions in which they are located as it can be quite misleading to look at the market too broadly.

“At Ingenious, we blend this market expertise with the ability to provide flexible, cost effective financing solutions for our clients by sourcing residential opportunities from across the UK based solely on individual merit.”

Brown also predicts that any weakness in demand from the owner-occupiers of the UK will be balanced out by a greater demand from renters – which is something for both local and US investors to consider.

Our consultants at BuyAssociation are experienced in assisting US investors with their UK property investments. Get in touch today for more information.

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