11:34 16 May 2013
Perhaps under normal circumstances, the fact that more than 50per cent of new homes in all of London are now owned by foreigners can be a bit disconcerting. But in times like this when UK is experiencing a housing crisis, this becomes a sort of welcome relief.
Foreign buyers invested £3billion last year with their purchase of London residential properties. Though the first impression was that bought properties are left abandoned after purchase, in reality, the houses bought by these rich absentee owners have become private rental houses giving way to another important source of private rental income.
This has definitely helped ease the housing problems.
Foreigners see London properties as a safe place for investment, especially for those coming from countries full of political turmoil. The major issue that sets the prices of London housing has been the perception of the readiness of foreign investors to acquire more tangible investments adds to that the very low interest rates which makes it a perfect scenario for investment.
Adam Challis Head of research residential research of Jones Lang LaSalle learned that 85 per cent of foreign buyers acquire property priced in the range of £400,000 to £600,000 for investment and re-sell them. The buyers belong to the middle-class. If not for these purchases, there will no developments forthcoming in the housing industry.
Mr. Challis added that the after the credit crisis, borrowing from banks for housing has become quite a challenge. Foreign buyers kind of saved the day for the market as 30 to 40per cent of the houses sold are bought cash by foreign buyers. Developments in the housing industry were made possible by the money coming from the foreign investors and precluded a much worse fate for the housing industry in London.
The housing sector can greatly benefit from the attempts of the government to further improve the economy. As banks ease up their debt restrictions, mortgages would become more available; prices could become more stable and put the housing industry on the tract once more.
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