Saturday, 3 August 2013

3 Out Of 4 New London Homes Sold To Foreigners

Most new homes in London are being sold to foreign buyers at overseas events before they are built or advertised in the UK, according to a property group. Three-quarters of new homes in the centre of the capital were sold to overseas buyers in 2012, with more than half going to those in the Far East.

Data from Knight Frank showed a rising proportion of mid-market homes were being sold to foreign buyers, who have traditionally favoured the most expensive properties, but that prices were rising. The worrying trend means British housebuyers, particularly first-time buyers, could find themselves priced out of London, where house prices have risen to a three-year high.

Tom Rundall, from Knight Frank, told the Financial Times that foreign buyers were buying average-priced homes in the capital as well as high-end properties. He said: 'We have seen a sea change over the past year in terms of the kind of price point foreign buyers are chasing, whether it's a studio apartment in Clerkenwell or a one-bed flat in Kings Cross.  This is not the jet-set but rather the working middle classes expanding into the world.'

Many of the new homes are sold 'off-plan' - before they are built - at glamorous events in Singapore, Hong Kong, China and Malaysia, where developers can sell more properties in a weekend than they do in the UK in a month.

Buyers who get a house 'off-plan' usually get a discount, while receiving payment before building starts helps developers who can struggle to get funding for a project without evidence of committed buyers.

Rob Perrins, chief executive of Berkeley Homes, told the Financial Times: 'For a lot of developers, if you can't show that you can pre-sell enough to cover the construction costs, the banks simply won't finance you. It would be suicide to put £100m of your own money into the ground without forward sales.'

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