It’s no secret that countries such as the UK, Canada & Australia have been major targets for foreign property investors as of late. Over the past 15 years, it’s estimated that the average UK house price has jumped 20% due to the impact of foreign investors alone.
Whilst it’s logical to assume that overseas money would gather at the upper end of the housing market such as Kensington & Chelsea, the effects of foreign investment has no doubt trickled down, encouraging domestic investors to look further afield to places like Leeds, Birmingham and Liverpool for better affordability and yields.
According to a 2014 study by Land Registry, the average price of a home in Britain had almost tripled from its 1999 averages to that of around £215,000 but would of in fact been £174,000 without the effects of foreign money buying up stock.
What does this mean for local investors
As housing affordability continues to be a concern, those with an existing portfolio, specifically in London and the South-East, are benefitting from this influenced ‘spike’ in capital growth and subsequently their own net worth. This also gives domestic landlords more leverage on their existing equity to re-invest in the up-and-coming and more affordable locations in the UK where overseas money isn’t currently focussed.
It’s now becoming crucial for landlords, new and old, to take a long, hard look at their current financial situation and ensure that they’re able to take full advantage of these trends by structuring their investments in the most efficient way possible.
With some deciding to put a halt on investing during times of market turbulence, others decide to capitalise from it, and in the UK it seems foreign investors are doing just that.