A return of foreign buyer demand could increase property values by £134,000 in some areas of the capital according to the latest property market analysis by London lettings and estate agent, Benham and Reeves.
How the research was conducted
The research was carried out by looking at Land Registry data and analysing London house price trends in the six months since travel restrictions reduced foreign buyer activity and how this rate of growth differed from the six months prior. Benham and Reeves then looked at what a return to form may look like once travel restrictions have been removed.
On January 15, the UK closed all travel corridors and house prices have risen by 2.1% across the London market since. This is a 0.5% decrease in the rate of growth seen in the six months prior when prices went up by 2.6%.
Possibilities of London property market boost
According to the analysis, if travel restrictions remain in place and a similar level of growth remains over the next six months, the average London house price would go up by a further £10,701. However, if restrictions lift and foreign buyers can return en masse, this additional 0.5% boost would see prices shoot up to £13,496 – a £2,795 increase in market values.
Prime London boroughs such as Kensington and Chelsea are due to see the biggest benefit from a return of foreign interest. In the six months before the travel ban, the average house price in the borough saw a rise of 2.6%.
However, since then it has dropped by 8.2% to £1,239,831 and a similar decrease over the next six months would see a further £101,267 loss in value. In contrast, a foreign buyer revival of 2.6% in values would add £32,365 to the average house price in the borough, a total turnaround of £133,631.
Other boroughs that could benefit from a return to pre-travel ban times include Haringey (£76,582), Southwark (£68,705), Merton (£41,434) and Lewisham (£24,207).
Director of Benham and Reeves, Marc von Grundherr, commented: “The London market performs very independently to the rest of the UK and so while house prices have increased since the introduction of the stamp duty holiday, we’ve simply not seen the same house price boom like the rest of the UK.”
von Grundherr continued: “Restrictions around travel and the resulting reduction in foreign buyer demand have also had a far greater impact on London compared to anywhere else across the nation and in some boroughs this has had quite a substantial impact on house prices.”
He concluded: “Once the foreign buyer floodgates are fully open, we expect London property values to accelerate, bolstered by domestic demand as many return to the workplace, with the capital regaining the mantle where regional rates of house price growth are concerned.”
The tables below highlight the findings in more detail:
Location | Current average house price (Jun 2021) | Pre-travel ban market growth (6 months – Jul 2020 to Dec 2020) | Potential changed based on pre-travel ban market growth applied to the current average house price* | Post-travel ban market growth (6 months – Jan 2021 to Jun 2021) | Potential change based on post-travel ban market growth applied to the current average house price** | Foreign demand property price boost*** |
Kensington and Chelsea | £1,350,104 | 2.6% | £32,365 | -8.2% | -£101,267 | £133,631 |
Haringey | £590,212 | 8.1% | £44,993 | -5.7% | -£31,589 | £76,582 |
Southwark | £543,558 | 6.3% | £31,568 | -7.4% | -£37,137 | £68,705 |
Merton | £555,391 | 4.4% | £23,386 | -3.4% | -£18,047 | £41,434 |
Lewisham | £443,744 | 4.4% | £19,121 | -1.2% | -£5,086 | £24,207 |
Redbridge | £448,692 | 5.8% | £26,280 | 0.9% | £3,888 | £22,392 |
Ealing | £502,532 | 5.0% | £25,457 | 1.1% | £5,708 | £19,748 |
Waltham Forest | £474,700 | 5.9% | £28,579 | 2.2% | £10,544 | £18,035 |
Hounslow | £427,117 | 6.6% | £28,810 | 2.6% | £11,397 | £17,414 |
Sutton | £392,574 | 4.8% | £19,124 | 0.5% | £1,881 | £17,243 |
London | £499,817 | 2.6% | £13,496 | 2.1% | £10,701 | £2,795 |
*Based on applying the pre-travel ban house price growth % to the current average house price (Jun 2021 – latest available) | ||||||
**Based on applying the post-travel ban house price growth % to the current average house price (Jun 2021 – latest available) | ||||||
***Based on the difference between the pre and post-travel ban rates of house price growth on the current average house price (Jun 2021 – latest available) | ||||||
Location | Pre-travel ban market growth (6 months – Jul 2020 to Dec 2020) | Post-travel ban market growth (6 months – Jan 2021 to Jun 2021) | ||||
AveHP – Jul 2020 | AveHP – Dec 2020 | Pre-travel ban market growth (6 months – Jul 2020 to Dec 2020) | AveHP – Jan 2021 | AveHP – Jun 2021 | Post-travel ban market growth (6 months – Jan 2021 to Jun 2021) | |
Kensington and Chelsea | £1,323,682 | £1,358,236 | 2.6% | £1,350,104 | £1,239,831 | -8.2% |
Haringey | £540,685 | £584,381 | 8.1% | £590,212 | £556,723 | -5.7% |
Southwark | £510,126 | £542,112 | 6.3% | £543,558 | £503,464 | -7.4% |
Merton | £527,457 | £550,440 | 4.4% | £555,391 | £536,716 | -3.4% |
Lewisham | £420,839 | £439,185 | 4.4% | £443,744 | £438,599 | -1.2% |
Redbridge | £416,115 | £440,279 | 5.8% | £448,692 | £452,547 | 0.9% |
Ealing | £473,765 | £497,498 | 5.0% | £502,532 | £508,177 | 1.1% |
Waltham Forest | £445,565 | £471,819 | 5.9% | £474,700 | £485,020 | 2.2% |
Hounslow | £397,286 | £423,405 | 6.6% | £427,117 | £438,225 | 2.6% |
Sutton | £373,551 | £391,662 | 4.8% | £392,574 | £394,447 | 0.5% |
London | £483,214 | £495,994 | 2.6% | £499,817 | £510,299 | 2.1% |
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