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Westhill Property Consultants London Housing Crisis: How Far Are Super-rich Foreigners To Blame?
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Westhill Property Consultants London, a Hampstead Heath based estate agency agrees with Dave Hill’s following assessment writing in The Guardian Newspaper.
Big money investors from abroad have added to the problem but they are only one part of the story
Something isn't right about the London house price narrative that's enjoyed such favour in these parts lately. It began with a New York Times article two weeks ago in which an ex-pat Londoner mourned the departure of two neighbouring households for other parts of the UK, in each case blaming the capital's insane property price. This was described as part of a trend. But my first reaction was: "what's new?"
London's population is rising fast - driven primarily by birthrate - yet for years it's been the case that large numbers of people have moved out of the capital and into home ownership in other parts of the country. A 2010GLA report found that between 2001 and 2009 no less than 2.1 million departed for different locations in these islands, with most moving into owner-occupation - London property was too expensive. The size of the outflow actually fell during 2007-09 as mortgages became harder to get.
What seems to have happened in the past year or two is that a manic upward surge in prices has meant even more Londoners unable to buy a home in their own city, with those affected now including even the more affluent sections of London's middle-class - a description that seems to fit the NYT writer's outward-migrating friends - and, of course, their young grown-up children.
Setting aside jaundiced suspicions about precisely why London's many-faceted housing crisis, which has been deepening all century, is suddenly of such concern to a certain type of newspaper, let's examine the argument that super-rich foreign investors are to blame for the crisis embracing the capital's more prosperous residents.
No one doubts that massive money flowing in from abroad in search of easy profits and safe havens is a significant part of the story. But who do we mean by "foreign investors" and how significant are they in the wider scheme of things?
Jaws drop at statistics showing that 75% of new homes in inner Londonand half of central London's £1m-plus homes go to foreign buyers. Yet estate agent Knight Frank has calculated that nearly half the foreigners who've purchased £1m-plus properties in central London in the last year live in the UK, and bought to let rather than to leave. The potential problem there is not the foreignness of the investment or even the investment itself but the likely size of the rents.
Meanwhile, across the rest of inner and the whole of outer London, the vast majority of home-buyers in the past two years have been UK nationals. Also, overseas buyers of homes in London aren't all super-rich. "This is not the jet-set but rather the working middle classes expanding into the world, often for the first time," said a Knight Frank representative recently of purchasers from Malaysia, Singapore and Hong Kong.
Londoners themselves are probably part of the reason prices continue to soar. One housing market expert suspects that what he calls "this crazy boom" is being further fuelled by a kind of panic-buying among people with savings, wealthy relatives or equity in existing homes who fear that the market is spiraling beyond their means forever. He predicts that this now-or-never part of the "feeding frenzy" will continue until everyone who can get their hands on the necessary cash has sunk it into their pile of bricks and mortar.
All of this suggests we should be cautious about blaming the boom entirely on opportunist billionaires from far-off lands idly parking their fortunes in new apartment blocks and leaving these empty until a better offer comes along. The thesis that London property has become a casually-disposable form of cash or bonds for such people rightly excites outrage and is fine as far as it goes, but it doesn't explain everything and might be better seen as a particularly spectacular phase of a phenomenon that's been with us for some time.
And the heart of the housing crisis lies elsewhere. Responding to the NYT piece, London historian Jerry White wrote "it is a delusion to think that a few hundred, even a few thousand, fabulously wealthy individuals can affect the lives of 8.2 million people," and concluded that London's housing problem results "not from pressure at the top but from a shameful lack of affordable public housing for the millions of people who make this city tick."
This lack, and the wider shortage of genuinely affordable homes in London whether to buy or to rent (including in the private sector), has been with us far too long under national governments of different stripes. The current market madness is part of what's wrong, and seems unlikely to self-correct while the supply of new market housing is tailored towards a demand other than that of those whose need for homes is greatest - another delusion, and one the Mayor of London shares.
But lack of political will and judgement are the larger culprits here. London must find ways to build homes that Londoners and potential Londoners across the income spectrum can afford to live in - and must do so for its own good.
Westhill Property Consultants, London specializing in selling properties in North and Northwest London have noticed a significant increase in inquiries and sells to foreign investors especially from KL Malaysia and Jakarta Indonesia for inexplicable reasons.
For More Information Visit us at http://www.westhill.info/
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