A new study has found that an increase in the number of foreigners buying property in the UK is largely responsible for inflating house prices.
The study, conducted by King’s College London (KCL), found that average property prices are around £40,000 higher than they would be if there was no foreign investment in UK property.
What’s more, foreign investment has also negatively affected homeownership rates in the UK, according to the study.
Had there been no foreign investment, the KCL findings suggest that average home prices in the UK would have hovered around £174,000 by 2014. However, the influx of foreign investment caused them to go up to £215,000 – up from £70,000 in 1999.
That means 28 per cent of house price growth over that period could have been down to overseas investment – much of it through anonymous shell companies registered in secretive tax havens.
Overseas investment has largely been concentrated on London and the South-east, which have seen the largest price increases, but cities such as Liverpool and Manchester have also attracted foreign buyers.
Filipa Sa, a senior lecturer at KCL who conducted the research, analysed Land Registry data and found that a rise of 1 per cent in the share of property sales to companies registered overseas raised prices in the local area by 2.1 per cent.
However, the research found that while foreign cash raised prices, there was no evidence that it led to an increase in the supply of homes.
Article published 19th April 2018