The weakness of the pound is having a significant impact on overseas investors who are now seeing significant savings when purchasing UK property. Despite the UK’s current “cost of living crisis”, the UK property market continues to outperform, with continued annual house price growth providing exceptional returns for investors.
Falls in Sterling have previously created excellent opportunities for overseas investors in the UK property market, and there are significant saving to be made for those who react quickly.
The last time the pound suffered a serious fall was in 2016 following the Brexit vote. During this time investors in the Middle East and Far East were reported to have seen an “overnight 20% discount” on UK property. Quicker and more astute investors were able to profit extremely well, with many missing an excellent opportunity with the pound regaining strength over the following months.
Last month, Sterling fell 0.64% to 1.145% - a level that has not been seen for 37 years. The Bank of England said that a stronger dollar and also a weaker outlook for the UK economy was putting significant pressure on Sterling.
The Governor of the Bank of England, Andrew Bailey, warned that as the war in Ukraine continued, there was little that could be done to prevent the UK from falling into a recession this year, with further drops in sterling possible. He added that the problems would “overwhelmingly be caused by the actions of Russia and the impact of energy prices.”
It is simple for overseas investors to calculate the savings they could make when buying UK property. For example, in the case study below, an investor holding USD buying today could save 22% or $183,669 (£162,391) when buying at October’s rates, compared to the same time 12 months earlier.
Case Study: USD
| USD | ||||||
| Purchase price | Exchange Rate | Amount ($) | Saving local | Saving GBP | Currency Save | |
| £739,798 | (New) | 1..13103 | 836733.73 | 183669.65 | 162391.5 | 22% |
| October 2021 | 1.3793 | 1020403.38 |
Despite the potential problems facing the UK’s economy overall, its property market seems to be largely unaffected, with demand outstripping supply. In fact, the buy to let market is showing signs of moving faster than it has ever done before. Savills reports annual UK property price growth of 11.2% across the country in May 2022, which has spurred on those who are investing property in 2022.
The Savills report states that, “The deficit of homes on the market will continue to support price growth in the short term before affordability pressures finally press on the breaks in the medium term. Our latest forecasts, released 31st May, predict annual house price growth to finish 2022 at around 7.5%.”
With the market moving so quickly, investors looking for the best property investment should move swiftly to avoid missing out. With rents continuing to rise in places such as Manchester and Preston, and landlords buying properties incredibly fast, the UK’s property market remains extremely healthy, offering the potential for significant returns.
Want to learn more about the UK property market, and the best areas to consider investing in? Contact our team today by clicking here.