| Brexit fears and worries over the global economy takes toll on the pound.
The weak pound may help to lure more international investors to the UK housing market, pushing up property prices in the process, especially in London. Foreign investors have been attracted to the London property market for years – snapping up a wide range of homes, particularly in prime central London. |
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A report published last year found that offshore companies have acquired more than £150 billion of property in England and Wales since 2000.
However, the strength of the pound has contributed to drop in the number of overseas nationals buying property in London and other parts of the UK over the past 12 months, as property prices have suddenly looked very expensive to overseas buyers. |
| But with sterling’s value sliding on international currency markets, declining sharply since the start of 2016, the UK property market is starting to look attractive once more.
“The fall in sterling, which is likely to continue at least until June, is likely to attract international buyers into the market as property prices appear to be comparatively ‘cheaper’,” said Naomi Heaton, CEO of London Central Portfolio. Analysts from Swiss bank UBS have suggested that sterling could actually fall to parity with the euro if Britain votes to leave the EU, which in turn would further reduce UK house prices for overseas buyers. “In our view, the largest part of the weakness in sterling since November can be attributed to increased concern over the possibility of exit from the EU,” the bank said. “In the near-term, we forecast the euro to rise to 0.84 pence and sterling falling to $1.36, reflecting the weighted probability of Remain/Leave scenarios.” |