Weakening pound hands foreign homebuyers £40,000 discount despite an increase in property prices
The latest research by lettings and estate agent, Benham and Reeves, has shown that despite house prices continuing to climb over the last year, foreign buyers currently looking to the UK property market are saving a considerable sum due to the weaker pound, enjoying discounts as high as £40,000.
Benham and Reeves analysed current property market values and how they compare to this time last year, with the research showing that since February 2022, the average UK sold price has increased by 7.8% to £294,329 today.
Even in a slower London market, the average value of a home has increased by 4.8%, commanding £543,099 in current market conditions.
However, while domestic homebuyers have had to contend with the increasing cost of climbing the ladder, exchange rate fluctuations and a weakening British Pound compared to some currencies have presented an opportunity for foreign buyers to secure a saving.
In February of last year, the average UK house price of £273,066 would have required a buyer from the United States of America to spend $369,459. Today, however, the higher average UK house price of £294,329 would see them spend just $355,079, a saving of $14,381 (3.9%) or £12,161, despite the increased value of UK bricks and mortar.
This saving is even higher in an more inflated London market, where purchasing at the current London average of £543,099 would require them to spend $655,195 versus the $700,993 they would have spent in February of last year, a difference of $45,799 or £38,730.
Buyers from the UAE have also benefited to the same extent, saving -3.9% or AED 52,717 on their purchase, climbing to AED 167,986 (-6.5%) in London. That’s the equivalent of £12,142 saved on the average UK home or £38,690 on the average London home.
The UK continues to be a popular destination of choice for Hong Kong homebuyers and they too have seen the cost of purchasing a UK home fall, down by -3.3% when compared to this time last year, a saving of HK$95,145 or £10,254.
Again, in London, Hong Kong nationals are enjoying savings as high as 6% on the average cost of a home in the capital, reducing their purchase price by HK$325,801 or £35,111.
However, not all foreign buyers are benefiting to the same extent. The Euro has failed to provide a discount on the average UK house price, with European buyers paying 1.9% more today versus a year ago, while those looking to London are seeing a marginal saving (-0.9%).
Foreign buyers from China are paying the equivalent of £10,868 more today versus a year ago on the average UK home, With Japanese buyers also paying the equivalent of £5,391 more today.
Director of Benham and Reeves, Marc von Grundherr, commented: “We’re yet to see any notable reduction in house prices and, in fact, the latest sold price figures show that they have continued to climb across both London and the UK as a whole. This demonstrates the tenacity of the property market even during times of economic uncertainty and highlights why so many foreign buyers look to the UK when investing in bricks and mortar.
“We’ve seen a steady stream of foreign interest returning to the market, particularly across London, pretty much since Covid travel restrictions were lifted. However, a weakening pound has enticed them to an even greater extent, as many are now enjoying a substantial discount when purchasing versus the price they would have paid a year ago when property values were lower.”