By Lina Saigol
London is experiencing an influx of international buyers willing to blind purchase properties in the city, as they take advantage of lower prices amid the COVID-19 pandemic.
Real-estate investment advisory firm London Central Properties said that 22% of all its acquisitions in London this year were bought “sight unseen” on behalf of investors unable to travel.
Andrew Weir, LCP Chief Executive, identified four significant reasons for why this is happening. “Firstly, the stamp duty holiday ending in March 2021, the anticipated 2% additional surcharge for overseas buyers in April, the added appeal of an attractive sterling exchange rate, and most importantly, the current discounted prices in the market compared to its peak in 2016.”
Sebastian Gibson, who owns and runs a boutique estate agency FG Consultants dealing in super prime London, echoed the findings.
“There has been an extraordinarily rise in people buying properties without having seen them in bricks and mortar, through the iPhone camera. This rise has been caused by travel restrictions and so there is now a new overseas market that buys in this manner.”
On Tuesday, shares in Crest Nicholson /zigman2/quotes/207992108/delayed UK:CRST -1.28% jumped 20% in early trading after the house builder said that profit for the year will be higher than expected , boosted by a strong housing market since the end of the first lockdown.
In a trading statement, Crest Nicholson said pretax profits for the 12 months to the end of October would be at the top end of its expected £35 million to £45 million range.
“The company also reinstated its dividend on a 2.5 times cover basis, showing that for all the problems facing the U.K. economy the house building sector is doing quite well,” Michael Hewson, chief market analyst at CMC Markets U.K., said.
Shares in Crest Nicholson were up 16.45% in late afternoon Tuesday trading. Shares in Britain’s biggest house builder Barratt Developments /zigman2/quotes/209812640/delayed UK:BDEV -0.67% rose 3.62%.
“The introduction of another national lockdown will undoubtedly bring fresh challenges, but we welcome the Government’s support to maintain construction activity and for the housing market to remain open for business,” said Peter Truscott, Crest Nicholson Chief Executive.
In October, house prices rose at the fastest rate in almost six years , according to the latest data from Nationwide.
The U.K.’s biggest building society said that the average U.K. house price jumped by 5.8% during the month, compared with the same month in 2019, to £227,826.
Robert Gardner, Nationwide’s chief economist, said the data suggest that the economic recovery has lost momentum in recent months, with economic growth slowing sharply to 2.1% in August, down from 6.4% in July, despite a strong boost to the hospitality sector from the ‘Eat Out to Help Out’ restaurant-meal subsidy, which has since expired.
Gardner warned that activity is likely to slow in the coming quarters, perhaps sharply, if the labor market weakens as most analysts expect, especially once the stamp duty holiday expires at the end of March 2021.
Investors still recognize London as a global city and a ‘go-to’ destination, highlighted by the increase in young professionals moving to the capital, LCP said.
It reported a 21% increase in under 30-year olds starting new tenancies in the third quarter of the year, compared with the same period a year earlier.