Overseas buyers have been particularly active in the UK property market with many enticed by strong rental yields and capital appreciation prospects.
Recent research by Benham and Reeves estimates that there’s 280,021 homes across England and Wales currently registered to an overseas correspondence address or company. With the average house price sitting at £300,636, that equates to an estimated £84.2bn worth of foreign-owned homes.
In order to figure out the number of properties with a title registered to an overseas correspondence address, Benham and Reeves submitted a Freedom of Information request to the Land Registry. This was also combined with government data on properties registered with an overseas company.
Director of Benham and Reeves, Marc von Grundherr, commented: “Foreign homeownership levels have climbed by 3.2% in the last year alone and the vast majority of this activity is individual buyers, rather than offshore entities.
“Despite the current economic landscape, this interest has remained strong so far in 2023 and we expect that foreign buyers will continue to bring a much needed boost to an otherwise weary property market as the year progresses.”
The benefits of investing in UK property
Over the decades, the resilient UK property market has remained robust throughout economic ups and downs. This helps ensure capital gains for most property investors who hold onto their assets for a period of time. And this is why overseas buyers continue to have confidence in the sector with UK property having long been considered a secure option and safe haven.
Meanwhile, for those who opt to rent out their property investments, the private rented sector is home to approximately a fifth of the country’s population, which also ensures high tenant demand and strong yields, especially in certain hotspots. And there are still plenty of areas across the UK that are expected to thrive in the coming years.
Additionally, the weakening of the pound in recent times has led to a favourable exchange rate with a number of other currencies, including the US dollar. This means that buyers from abroad essentially get a discount on property purchases at the moment compared with when the pound was previously performing more strongly.
Leading regions for overseas buyers
London is the region with the highest number of foreign-owned homes (103,425). And all except one of the top 10 most valuable markets for foreign homeownership are located within the capital. While there is still a strong number of overseas buyers purchasing property in London, there has also been a rise in investors looking further afield.
The south-east of England has the second highest number of foreign-owned homes with 47,862 properties and an average house price of £391,766. The north west followed with 40,500 homes owned by overseas buyers, and the average house price is significantly cheaper here, coming to £212,814.
Liverpool, Manchester and Salford are in the top 20 most valuable markets for overseas buyers, showing there’s a growing number of overseas buyers purchasing property outside of the traditional London market. These locations come with lower entry prices and the opportunity to earn particularly strong rental yields and capital appreciation.
US investors buying domestically and overseas
Recently, the US housing market has picked up pace with demand increasing. Although, supply is down as the number of homes up for sale has recently fallen to a new low. At the same time, the median U.S. home sale price increased by 1.5% from a year earlier during the four weeks ending 9 July, according to research by Redfin.
This is the first increase in nearly five months. But elevated mortgage rates are cutting into buyers and investors’ budgets as average weekly rates are at their highest level since November 2022.
Purchasing power is naturally impacting buyers and investors at the moment. While that’s happening in the UK property market too, the pound remains relatively weak against the US dollar, which contributes to a relative price cut for any investment made in the UK. And this can maximise returns for US investors and provide a way of diversifying their property portfolios.
BuyAssociation has offices in Manchester and London and is experienced in connecting overseas investors with UK property investment opportunities. Get in touch for more information.
