According to Knight Frank London in particular remains a popular destination with people from overseas and the firm says that the proportion of prime London property being bought by well-heeled overseas house hunters increased by 17 per cent during 2008.
The slide in property prices in famous-name London areas such as Belgravia, Canary Wharf, Chelsea, Hampstead, Kensington, Knightsbridge, Fulham and St John’s Wood is tempting over buyers from Europe, the Middle East and the US who know that much of London’s high-end property now represents a ‘bargain’.
For example, Knight Frank says prime residential prices in central London fell in October 2008 by 3.9 per cent, the fastest rate of decline on record .
“Up until the summer [of 2008] many vendors were holding to their pre-crunch asking prices,” says Liam Bailey, head of residential research at Knight Frank. “After what has taken place in the financial world, an increasing number of vendors have decided to cut prices to achieve a sale. Our index shows this trend clearly – with the rate of month-on-month price drops gathering pace.”
Independent prime London property consultant Charles McDowell says that such rapid price drops are making prime London property attractive to many foreign buyers for the first time.
“Well-heeled buyers from Euro and US dollar-dominated countries are arriving in London by the private planeload, as this is currently the best buying opportunity for them in many years,” he says.
And who would blame them when, he says, “a superb home that may have sold last year for £10 million is now on the market for £8.5 million”.
But it’s not just falling house prices enticing foreign buyers over. For years Brits have been buying up swathes of Spain, France, Italy and the US on the back of a strong pound – but now the parlous state of sterling means buying in the UK is now up to 30 per cent cheaper for anyone using dollars or euros to buy property in the UK.
“This increased foreign interested is not only at the top of the London market – we are also seeing something of a run on London boltholes around the £1 million mark too,” says Charles McDowell.
“For Italians buyers, for example, London now offers an excellent opportunity to escape an unfavourable domestic tax environment, but was until recently not a realistic property option.
“And It will be interesting to see if the capital freed up in London remains here or is moved to the country market.”