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LONDON: The UK capital’s status as a magnet for wealthy foreign homebuyers is helping to drive prices in many areas beyond the reach of most Londoners. That’s putting pressure on politicians and developers to convince locals that they haven’t been forgotten in the rush to court overseas investors.
Foreign-born buyers made 69% of new central London home purchases in the two years to June last year, with 28% living outside the UK, broker Knight Frank LLP said in October. London house prices increased 18% in the first quarter from a year earlier, the most since 2003, Nationwide Building Society said on Wednesday.
“There is a head of steam building where people are seeing this situation, which is so blatantly unfair, and want firm action to be taken,” Darren Johnson, chairman of the London Assembly’s housing committee, said by phone.
The conflict comes as government mortgage-assistance plans revive housing markets across the UK by helping more Britons get home loans. But the programmes have also contributed to soaring prices in London.
Home prices in the city climbed to a record £362,699 (RM1.9 million) in the first quarter, more than double the national average of £178,124, Nationwide said.
Mortgage approvals for January climbed to the highest since November 2007, according to the Bank of England. Approvals fell in February and net mortgage lending increased to £1.7 billion from £1.5 billion a month earlier, the central bank estimates.
Developers have refocused their sales efforts on local buyers in response to criticism of their efforts to market some homes exclusively abroad, but have stopped short of closing the door on foreign investors.
Battersea Power Station, the derelict brick landmark on the south bank of the River Thames, is one of London’s largest and most talked-about housing developments. When the project’s Malaysian owners sold the first 866 homes in just three days in January, more than half went to foreign buyers. The second phase of more than 200 apartments goes on sale in London only on May 1.
Rob Tincknell, chief executive officer of the Battersea Power Station Development Co, said in an interview that the company’s staff called all 13,000 people who registered to buy the project’s 3,500 homes and intends to give preference to those who said they intend to live in the homes they buy.
This article first appeared in The Edge Financial Daily, on April 4, 2014.
