Foreign homebuyers from the United States have benefited from a weakening pound the most, with the average home now costing them -14.8% less across the UK and -16.5% in London.
Alliance Fund analysed the average cost of a property across both the UK and London and how this cost has changed since the start of the year, taking into account the strength of the currency of the most prominent foreign home buying nations compared to the UK.
Back in January the average UK house price of £272,833 equated to $369,825 US dollars at a rate of 1.36 USD to the pound.
Fast forward to today and the average UK house price has climbed by 7.1% to £292,118. However, with a weak pound commanding just 1.08 dollars last week, that brought the average UK price to $314,932.
Iain Crawford, chief executive of Alliance Fund, said: “The current forecast for the UK property market may be starting to worry the nation’s homeowners, but one person’s loss is another person’s gain, particularly when it comes to the fluctuating value of bricks and mortar.
“However, while opportunistic domestic investors are still waiting in the wings as house prices climb ever higher, a weakening pound has presented a great opportunity for many foreign buyers, who are now considerably better off when buying compared to the start of the year.
“With the government’s latest economic interventions doing little to reverse the declining strength of sterling, buyers from the US, UAE and Hong Kong, in particular, are set to keep on saving when it comes to a UK property purchase.
“This should help further bolster a rejuvenated level of foreign demand following pandemic restrictions. However, this activity is likely to be concentrated within specific areas, such as prime central London, and so it will do little to help negate the uncertainty that is currently hanging over the wider UK market.”
Across London house prices have climbed by 4.9% so far this year, but despite this the cost for U.S buyers has still fallen by -16.5% since the start of the year.
Homebuyers from the UAE are also considerably better off when purchasing a UK property, with the average UK home -14.5% more affordable due to the weaker pound, while in London this discount sits at -16.2%.
Hong Kong homebuyers are paying -13.9% less for the average UK home in their native currency and -15.6% less in London versus the start of the year, with buyers from Singapore seeing a considerable boost to property affordability as a result of the weaker pound at -9.5% and -11.3% respectively.
As a result of the declining value of the pound, buyers from Canada, India, Australia and China are also benefiting from a boost to property affordability in the UK market.
It’s a mixed bag for those from the Euro area looking to the UK for a property purchase. The high rate of house price growth across the UK as a whole means that they are paying 0.2% more for the average UK home versus the start of the year.
However, with London house prices not performing to the same extent, those purchasing from the Euro zone can do so at a discount of -1.8% as a result of the plummeting pound.
But it’s bad news all around for buyers from Japan, not only will a stronger pound on the Yen see them pay 7.3% more for the average UK home versus the start of the year, in London they’ll still pay an additional 5.2%.