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Expats have an unexpected property investment boost from the weak pound despite rising UK house prices.
Foreign currency exchange rates are saving expats up to £40,000 on asking prices, says leading London estate agency Benham & Reeves.
The agency has compared the current property market to discover that while buyers across the UK are struggling to finance home purchases, expats and other foreign buyers have found the weakening pound and exchange rate fluctuations of some currencies have opened a window of opportunity to make significant savings.
Since February 2022, house prices have soared by 7.8 per cent from an average of £273,066 to £294,329.
In London, the price rise was slower, hitting 4.8 per cent, but leaving average house prices at £543,099 – the highest in the country.
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£40,000 Saving For Foreign Buyers
For expats based in the USA, the cost of an average UK home a year ago was $369,459. Today, the same property costs $355,079 – a $14,381 saving representing a 3.9 per cent or £12,161 drop in value despite prices rising across the UK.
The saving is even more in London, where house prices are higher. A US buyer would pay $655,195 for an average-priced home in the capital – a $45,799 (£38,730) saving on the $700,993 the same property cost a year ago.
Buyers from the United Arab Emirates (UAE) have benefitted from similar savings, but the windfall does not apply to expats from everywhere. Expats in Europe must pay 1.9 per cent more than a UK buyer due to a weakening Euro.
Benham & Reeves director Marc von Grundherr said: “We’re yet to see any notable reduction in house prices and the latest sold price figures show that they have continued to climb across both London and the UK as a whole. This demonstrates the tenacity of the property market even during times of economic uncertainty and highlights why so many foreign buyers look to the UK when investing in bricks and mortar.
“We’ve seen a steady stream of foreign interest returning to the market, particularly across London, since Covid travel restrictions were lifted. However, a weakening pound has enticed them even more, as many are now enjoying a substantial discount when purchasing versus the price they would have paid a year ago when property values were lower.”
House price savings for expats compared
This table shows the savings expats can make on buying homes in the UK for investment.
| Country | Period | Average property price | Exchange | Average exchange rate | Estimated foreign currency investment | Exchange Rate Saving | Change % | Saving in GBP |
|---|---|---|---|---|---|---|---|---|
| USA | Feb-22 | £273,006 | GBP to USD | 1.3533 | $369,459 | |||
| Feb-23 | £294,329 | GBP to USD | 1.2064 | $355,079 | -$14,381 | -3.90% | (£12,161) | |
| China | Feb-22 | £273,006 | GBP to CNY | 8.5833 | ¥2,343,292 | |||
| Feb-23 | £294,329 | GBP to CNY | 8.265 | ¥2,432,629 | ¥89,337 | 3.80% | £10,868 | |
| UAE | Feb-22 | £273,006 | GBP to AED | 4.9677 | AED 1,356,212 | |||
| Feb-23 | £294,329 | GBP to AED | 4.4287 | AED 1,303,495 | -dh52,717 | -3.90% | (£12,142) | |
| Japan | Feb-22 | £273,006 | GBP to JPY | 155.9524 | ¥42,575,941 | |||
| Feb-23 | £294,329 | GBP to JPY | 160.677 | ¥47,291,901 | ¥4,715,960 | 11.10% | £29,088 | |
| Euro | Feb-22 | £273,006 | GBP to EUR | 1.1932 | €325,751 | |||
| Feb-23 | £294,329 | GBP to EUR | 1.1273 | €331,797 | €6,046 | 1.90% | £5,391 | |
| Hong Kong | Feb-22 | £273,006 | GBP to HKD | 10.5546 | $2,881,469 | |||
| Feb-23 | £294,329 | GBP to HKD | 9.4667 | $2,786,324 | -$95,145 | -3.30% | (£10,254) |
What does an average home look like?
Plenty of homes are for sale in London for around the £550,000 asking price, according to a search of property portal Rightmove.
However, the price only buys a one-bedroom apartment in a portered block off the trendy Cromwell Road, South Kensington, a few minutes walk from the Natural History Museum, Albert Hall and Regents Park.
Moving further away from the West End and Central London, £550,000 buys a three-bedroom semi-detached home in Springfield Drive, Newbury Park, Ilford.
In the UK’s cheapest region for homes – the North-East – £550,000 secures a four-bed detached double-fronted period home.
House Prices Steady
The rate of house price growth has slowed across the country, but prices are still rising.
House prices have steadied at an annual rise of 2.1 per cent for the past three months, says the latest data from one of the UK’s biggest mortgage lenders, Halifax.
The slowdown is attributed to falling mortgage rates, the availability of jobs and rising customer confidence, according to the bank’s mortgage director Kim KInnaird.
““In cash terms, house prices are down around £8,500 (-2.9%) on the August 2022 peak but remain almost £9,000 above the average prices seen at the start of 2022 and are still above pre-pandemic levels, meaning most sellers will retain price gains made during the pandemic. With average house prices remaining high, housing affordability will continue to feel challenging for many buyers,” he said.
Another big mortgage lender, Nationwide, reports prices are falling for the first time since August 2022.
The building society says prices fell 0.5 per cent monthly and 1.1 per cent yearly.
House Prices FAQ
Each report draws conclusions from a different stack of data. For example, the Office for National Statistics house price index is based on a wider sample than the Halifax report, which analyses customer mortgage approvals.
Results also depend on the type of customer the reporting business has, the location of offices and other variable factors. The reports are often related to different periods, so the data is incomparable.
There’s no such thing as an average home – the idea of an average price takes the total sales in each area and divides by the number of transactions.
The asking price is the figure the seller has in mind for a property, whereas the selling price is the actual figure the property changes hands for – often, the asking and sale prices are the same.
There is no best house price index (HPI). The one with the widest sample and the most accurate figures is produced monthly by the Office for National Statistics (ONS). Other popular indices are posted by Halifax, Nationwide and LSL Property.
Try the Land Registry for a list of past sales of a property. The record does not go back more than a few decades.
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