BLOG: UK house buyers are being left behind in their own backyard
We’re starting 2014 with an optimistic attitude; the economy is officially recovering, house prices are going up and the mood in the media is decidedly more positive.
This means the UK is attracting a lot of global attention, with an increasing number of foreign investors putting their money, and their trust, into our economy.
Indeed, overseas investment in the UK has been steadily rising in all markets according to official figures. For example, the UK Trade & Investment (UKTI) reported in July 2013 that the UK is the leading European destination for foreign direct investment (FDI) and the 2013 UK attractiveness survey released by Ernst & Young demonstrates that it has retained this position for a decade.
The United Nations Conference on Trade and Development also reported that the UK is faring particularly well considering the wider global climate, which has experienced an 18% drop in FDI while FDI inflows in the UK have risen by 22% during the same period.
An asset group that has received a considerable amount of overseas attention is property. UK real estate has always been regarded as a secure investment type and there has been heavy spending over the last few years with buyers favouring this asset over others that are perceived to be less reliable and consistent.
Deloitte has reported that more than £20bn was spent by foreign buyers in the UK property sector in 2012 and research from BNP Paribas Real Estate showed that UK buyers accounted for less than 20% of all commercial property transactions during the first half of 2013.
Our sales figures at Select Property reflect this with two-thirds of our clients who have bought UK property being based overseas, with the majority coming predominantly from South East Asia and the Middle East.
So why are overseas investors so attracted to UK property? The answer is simple; the UK is seen as being more financially secure and having more favourable legislation than other parts of the world, with less red tape and taxation to discourage people.
Although it’s very reassuring that the UK is attracting such inward investment, it is worrying that UK buyers are being left behind. What is making UK investors so hesitant while their overseas counterparts are striving ahead?
It could simply be a case of a natural cautiousness caused by the global downturn or it could be that they’re not as well-informed on the state of the market and what is available to purchase. Either way, we could have a serious problem on our hands as it means that in the future, foreign investors could have a monopoly on the UK property market, leaving our buyers unable to make their next move.
With the UK property market getting stronger by the day, domestic buyers need to play serious catch-up by exploring the opportunities in their own backyard and picking up that chance card to see where it leads.
Giles Beswick is a director at property investment specialist, Select Property