London’s property market is at risk of turning into a housing bubble, because of the amount of money being ploughed in by rich foreigners who buy houses that they don’t live in.
New research by the Future of London and the Smith Institute says London’s housing market has become distorted and dysfunctional, pricing out local people.
It says that super-rich foreigners buying luxury homes in London are now spending double what they were a year ago, at £5bn.
Over 60% of new-build homes in central London are currently bought by overseas investors, mainly from the Far East, with a high proportion being kept empty.
The report, London for sale? An assessment of the private housing market in London and the impact of growing overseas investment, by Andrew Heywood, says that higher Stamp Duty – now 7% on £2m-plus properties – has been brushed off by foreign buyers.
The report warns that investment on such a scale will push prices upwards, excluding Londoners from their own housing market. Home ownership, which is already down to 53.5% in London, compared with 66% for England as a whole, could fall further.
The report calls on the Government and London Mayor to curb speculation in the London property market and to collect better data on who is buying, and on the empty properties held by investors domiciled abroad.
Paul Hackett, director of the Smith Institute, said: “The Mayor and the housing minister seem to have a blind spot on the negative risks Londoners face from excessive growth in overseas speculative investment in London housing.
“There is a need to ensure that the homes that overseas investors are buying are lived in and that more of the profits are directed towards improving the supply of new affordable homes. We can’t sleepwalk towards another housing bubble.”
.png)
%20A%20property%20tale%20for%20our%20times.png)
Comments
japan example drops of 90-99%
=============================================
Prices were highest in Tokyo's Ginza district in 1989, with choice properties fetching over 30 million yen[7] (approximately $215,000 US dollars) per square meter ($20,000 per square foot). Prices were only marginally less in other large business districts of Tokyo. By 2004, prime "A" property in Tokyo's financial districts had slumped to less than 1 percent of its peak, and Tokyo's residential homes were less than a tenth of their peak, but still managed to be listed as the most expensive in the world until being surpassed in the late 2000s by Moscow and other cities. Tens of trillions of dollars worth were wiped out with the combined collapse of the Tokyo stock and real estate markets. Only in 2007 had property prices begun to rise; however, they began to fall in late 2008 due to the financial crisis.
===========================================
If it is a bubble then it will burst, prices will come down (if the government lets them) and all those foreign investors will lose money. This should be encouraged
I thought everyone had know about this for about the last 20 years???
While I agree with much of this, SDLT rates are not 11% - over £2m they are 7%. From 21 March 2012 SDLT is now charged at 15 per cent on interests in residential dwellings costing more than £2 million purchased by certain non-natural persons. This broadly includes bodies corporate, for example companies, collective investment schemes and all partnerships with one or more members who are either a body corporate or a collective investment scheme. There are exclusions for companies acting in their capacity as trustees for a settlement and property developers who meet certain conditions.