Overseas buyers driving London property market
Real estate investors in other countries may be set to continue transferring money to the UK and purchasing British property.
According to Capital Economics, affluent buyers from overseas have been particularly keen to invest in Britain in the last few years, reports the Telegraph.
Ed Stansfield, chief property economist at the group, flagged up London as one major hotspot of activity. Indeed, he said the UK capital is seen by many as a stable and secure option while the eurozone crisis remains unresolved.
However, foreign nationals who are looking for investment opportunities elsewhere in the UK may need to look beyond headline figures for the country as a whole.
Mr Stansfield said this is because London's enduring appeal with overseas property buyers is distorting the national picture. This means that the pull factors of London that are attracting people from other nations will not necessarily be found in other British cities.
"In terms of the outlook, it is certainly possible that prime central London will continue to flatter the national average picture for some months to come, especially if wealthy overseas buyers continue to view London property as a safe haven from the uncertainty generated by the eurozone crisis," he commented.
Mr Stansfield also warned that if a "major financial market shock" does occur as a result of the situation in London, the prime central London property market would be adversely affected. He said if this situation arises, house prices would fall just as much as they would elsewhere.
The economist added that outside London, house prices look set to continue experiencing a "slow, downward grind", due to values being out of kilter with incomes, continuing restrictions on borrowing and Britain's economic slump.
This comes after Grainne Gilmore of Knight Frank this week told the Financial Times that more than half of the property sales that took place in London during the 12 months to April 2012 were made by people from outside Britain. She said London's appeal with foreign nationals is boosting demand and competition in the area, which means property values are being pushed upwards also.