Research reveals some homebuyers are paying less now despite house price increases this year
Foreign homebuyers from the United States have benefited the most from a weakening pound, the latest research by an end-to-end real estate fund has revealed.
Alliance Fund analysed the average cost of a property across both the UK and London and how this cost has changed since the start of the year. It then looked at what this cost translated to in the currency of 10 of the most prominent foreign home buying nations and how they have benefited from a weakening pound when it comes to property affordability within the UK market.
With the average home now costing Americans 14.8% less across the UK and 16.5% less in London, the Alliance Fund research shows that homebuyers from the US have seen the biggest boost to their property purchasing potential within the UK market.
At the beginning of the year, the average UK house price of £272,833 equated to US$369,825 at a rate of 1.36 USD to the pound. Today, the average UK house price has climbed by 7.1% to £292,118. However, with a weak pound now commanding just 1.08 dollars, the average UK home is now worth $314,932.
Across London, house prices have climbed by 4.9% so far this year, but despite this, American homebuyers are now paying almost a sixth less than they were at the start of the year.
Alliance Fund reported that homebuyers from the United Arab Emirates are also considerably better off when purchasing a UK property, with the average UK home now 14.5% more affordable due to the weaker pound, while in London this discount sits at 16.2%.
Hong Kong homebuyers are now paying 13.9% less for the average UK home in their native currency and 15.6% less in London versus the start of the year, with buyers from Singapore also seeing a considerable boost to property affordability as a result of the weaker pound at 9.5% and 11.3% respectively.
As a result of the declining value of the pound, buyers from Canada, India, Australia, and China are also benefiting from a boost to property affordability in the UK market, Alliance Fund said.
Read more: Pound plunges to all-time low.
It’s a mixed bag for those from the Euro area looking to the UK for a property purchase. The high rate of house price growth across the UK as a whole means that they are now paying 0.2% more for the average UK home versus the start of the year. However, with London house prices not performing to the same extent, those purchasing from the Euro zone can still do so at a discount of 1.8% as a result of the plummeting pound.
But a stronger pound on the Yen will see Japanese buyers pay 7.3% more for the average UK home versus the start of the year. In London, they will still pay an additional 5.2%.
“The current forecast for the UK property market may be starting to worry the nation’s homeowners, but one person’s loss is another person’s gain, particularly when it comes to the fluctuating value of bricks and mortar,” Iain Crawford, chief executive at Alliance Fund, commented.
“However, while opportunistic domestic investors are still waiting in the wings as house prices climb ever higher, a weakening pound has presented a great opportunity for many foreign buyers, who are now considerably better off when buying compared to the start of the year.”
