British investors cool on UK residential property, but foreign buyers are still bullish

Despite the lack of interest from domestic investors, UK property still attracts significant interest from abroad.

Despite British investors cooling on UK property over the past year, foreign investor interest remains strong, according to new research from property investment company IP Global.

Of 2000 people surveyed across the country, just 3% of respondents say they plan to invest in the domestic residential property market over the next 12 months, down from 4% one year ago.

According to IP Global sales director Lauren Ireland: “The fact that fewer Brits are willing to invest in the UK residential market than a year ago suggests that the market’s mixed performance has knocked would-be investors’ confidence.”

This trend is despite growing interest in investing more generally among Brits. Whereas in 2017 83% of those surveyed said they have no plans to invest in any asset class over the next 12 months, that fell to 70% for those surveyed in 2018.

In contrast to their attitude to UK property, 13% of respondents said they planned to invest in stocks or bonds.

Ireland, however, urges UK investors to reconsider UK property.

She notes: “While investment in the property market always carries risks, UK bricks and mortar remains a good bet for two key reasons. First, while the property market can be volatile in the short term, in the long term UK residential has always offered very strong returns.

“Furthermore, the UK market is not a monolith, and different locations and property types can offer vastly different returns, with the cities of the Northern Powerhouse looking particularly attractive at the moment.”

British investors were also cautious when it came to investing in overseas property, with just 1% of respondents saying they were willing to invest in the asset class.

However, despite the lack of interest from domestic investors, UK property still attracts significant interest from abroad. According to IP Global, 19% of those surveyed from Hong Kong said they would consider UK property, alongside 20% from the United Arab Emirates and 45% from South Africa.

Driving this interest in UK property are a number of factors. Investors, often from politically or economically less stable countries, are attracted to the relative stability of the UK property market, seen as a strong long-term value proposition. The UK’s comparatively strong commitment to property rights also makes UK domestic property attractive.

At present demand from overseas is also boosted by the weak pound. Since the Brexit referendum in 2016 the value of the pound has tumbled by around 13%, making sterling-valued property cheaper for foreign buyers holding foreign currency.

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