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Foreign investors are now turning their heads to UK properties Christy Lam find out why
Recent reports show that the UK property market is improving. According to the Nationwide Building Society, UK housing prices rose by 0.5 percent compared to last October. Another report conducted by international residential property consultants King Sturge showed that foreign buyers are now considering buying properties near London.
Sterling’s value reached its peak in 2007. So the demand for properties around London has increased. In fact, Sterling’s continued weakness has attracted more overseas buyers. Although the British pound has strengthened recently, foreign investors predict that its value won’t increase too high as the inflow of foreign bank lending has become limited.
Through the years, the UK has been considered one of the most popular markets among overseas investors. The reason behind this is the transparency in the rules and regulations in allowing foreign ownership in properties. Overseas investors are more confident in the UK property rental market as agencies are more professional and well regulated.
Another reason why foreign buyers are attracted is that there are few limitations on foreign ownership. Unlike other countries like Australia, restrictions are not placed on constraining investors’ exit strategies. Australian property rules stipulate that foreign investors can only buy stock off-plan and sell it back to the local people.
King Sturge’s report also indicates that average house prices increased by 1.7 percent in the third quarter of 2009. Stock shortages were also recorded but home-buying activity has rebounded. Most experts forecast that there has been some momentum in the UK property market.
In contrast, the report shows that developers’ activities have slowed down due to the limited supply of properties coming onto the market and pushing up house prices. Even in the rental market, the number of available rental properties has fallen for the first time since January 2008. According to the latest RICB Lettings Survey released in December 2009, 22 percent of respondents expect rents to increase in the next three months.
However, some uncertainties will still remain in the UK property market. One is in the labour market which most economists expect may lead to a rebound in house prices next year, despite the steady increase in the unemployment rate in 2009.
In view of low mortgage rates, fewer people are not being forced to sell their properties and this may help to stabilize house prices. According to the figures provided by the Bank of England, the number of loans approved for property buying rose to 57,345 in October, the highest number since March 2008.
If market sentiment continues to improve, UK house prices could continue to rise next year in spite of some uncertainties. In the long run, sterling remains relatively weak and the UK property market is still a good choice for overseas investors. Obviously being prudent is always a golden rule for investing. So keep an eye on the UK property market and you may probably earn a fortune.
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