Flicking through the Telegraph website on Friday, I came across this arresting headline ‘How Osama Bin Laden helped push up prime UK house prices.’
It reminded me of one of the most important facts of the London housing market – a large proportion, if not the majority, of the most expensive properties are purchased by foreign cash-buyers. The global super-rich find London a safe and secure place to invest and live – unsurprising if the alternative is Russia where the rule of law isn’t always strictly applied to oligarchs or a Middle-Eastern country where there is the potential for the occasional uprising.
The point of the article is that London became the destination of choice for Middle-Eastern investors owing to the antipathy towards foreign muslims in America after 9/11. This created more demand for our most expensive homes and pushed prices up further.
Cash-rich foreigners aren’t just buying up West London’s prime addresses, but are also changing the character of areas further afield, like Hampstead and Highgate. (I can report however that they do not seem to have reached Hackney yet).
These buyers operate in a market and an economy far divorced from everyone else experiencing a sluggish economy, falling house prices, a mortgage famine, shrinking public services etc. Property prices at the top end continue to soar away, while they fall elsewhere.
In a time of little public investment in anything, let alone housing, I wonder whether we couldn’t ask the global elite to contribute a little more for the security and stability of a London home? Perhaps an additional charge on stamp duty for foreign purchases above a certain amount? The revenues could be hypothecated to help first-time buyers, especially those with families, get a stable and secure home of their own.
Given the astronomical prices, the number of purchases and the fact that these people are so wealthy even the global financial crisis didn’t dent their appetite for Mayfair mansions, I think we could raise a fair sum to put to better purposes.