The fact that London’s turning rapidly into the place for international property speculators to buy real estate has been widely commented on over the last year or so. One of the hottest cities in the world for those looking to snap up luxury developments, it’s also a lively, business-friendly city and a very safe place to invest – particularly in the current climate of global instability.
In 2013 alone, London had the best year in terms of property increases since 2006. The Office for National Statistics says the average price of a UK home is £248,000, rising to £441,000 in London. The UK capital’s also recently overtaken New York in a survey by the Association of Foreign Investors in Real Estate (AFIRE), when it comes to the best investment opportunities for overseas purchasers. Part of the reason for this is that London’s seen as a gateway to the USA and Asia, which is causing the excessive boom.
A recent report showed that London’s soaring housing market generated more wealth than the entire economy in New Zealand 2013, as the value of homes in the capital soared by more than £100 billion. This just demonstrates further the amazing returns on investments speculators are achieving by investing in London’s top boroughs. The ten most upmarket boroughs are valued at £609 billion – which incredibly is more than all the houses in Scotland, Wales and Northern Ireland added together. The total property market is set to be worth a record £1.24 trillion according to research. This has doubled in the last decade from £662 billion in 2003 – when prices surged by about nine percent. The rise is roughly the same as a medium sized economy such as New Zealand – which has GDP of £103 billion.
However, there have been concerns about the extortionate rises, with some pundits saying that the wealth could be subject to a mansion tax on properties over £2 million, depending on who wins the General Election in 2015. Deputy Prime Minister Nick Clegg has already expressed his support for the idea – as has Shadow Chancellor Ed Balls. The Chancellor, George Osborne, also announced that overseas buyers will be subject to Capital Gains Tax (CGT) as from April 2015 although this in the short term is likely to only push prices higher as buyers rush to snap up property and unlikely to deter buyers on a large scale.
Rapidly increasing prices are also largely due to the lack of new properties that are being built. In combination with record low interest rates, a burgeoning population and Help to Buy – the government-backed scheme for first-time-buyers – it is unlikely prices are going to fall any time soon. With construction underway in the city’s hotspots and the UK capital’s prime boroughs under more demand than ever, London’s set to remain a major attraction for foreign investors looking.