this shows how inconsiderately the housing market is managed. expensive homes should be taxed so that the ripple effect is played down. supply of homes below £500k for london should be boosted, in the tens of thousands of units. the middle classes will use the available income to boost the economy. people would have a lifestyle closer to the residents in other european capitals by affording to actually live in it instead of commuting for hours every day in creaking, overcrowded trains.
Wealthy foreigners have doubled their spending on London’s most valuable homes since the start of the year, undermining fears that a tougher tax environment could discourage the world’s super rich from taking up residence in the UK.
Sales of houses worth more than £5m soared 98 per cent in the first 11 weeks of the year with transactions totalling £723m, compared with £365m during the same period in 2011, according to research from estate agents Knight Frank.
The figures, which reflect 99 individual property sales during the period, up from 51 in 2011, are driven by overseas buyers, underscoring London’s position as the pre-eminent destination for international wealth.
The rise also goes some way to allaying concerns that an increased stamp duty tax – expected to be confirmed in Wednesday’s budget – and the prospect of a mansion tax would dampen international appetite for UK property.
Liam Bailey, head of residential research at Knight Frank, said the speculation about changes to the tax system had done little to dissuade overseas buyers from investing in London’s property market.
“Barring a more draconian wealth-targeting measure than those trailed so far, the global appetite for London property seems to be secure for the moment,” Mr Bailey said.
Overseas buyers have played an increasingly important role in London’s high-end housing market during the past decade. The trend has accelerated during the past year, however, as domestic buyers struggle with one of the toughest mortgage market’s for a generation. Foreign purchasers ploughed £5.2bn on central London houses last year, £1.5bn more than in 2010, according to the think-tank IPPR.
Jonathan Hewlett, head of London residential at Savills, said the capital’s position as a perceived haven from the turmoil in the eurozone and political unrest in the Middle East was outweighing the possible negatives of a tougher tax regime. “Since the elections in Russia, we have seen a lot of Russian buyers coming in and wanting something in the £30m plus market,” he said. “Unless we tax these kind of buyers beyond all comprehension, London will remain strong.”
The appetite from overseas buyers has pushed up prices rapidly in London’s expensive housing market, which has decoupled from the wider UK housing market. Prices in the capital’s prime market – the top 5 per cent by value – have gained 11.3 per cent during the past 12 months, compared with 0.2 per cent for the rest of the country.