Hong Kong emigrants have found a silver lining in the current downturn of the UK’s housing market, as it presents a lucrative opportunity for real estate investment. The decline in prices and a weakened pound have attracted the attention of investors like F. Chiu, a Hongkonger who relocated to London with her father nearly a year ago. Chiu recently made two significant property purchases, taking advantage of the favorable market conditions.
Chiu’s first purchase was a spacious 1,000 sq ft flat in the desirable West End, located near the Elizabeth Line tube station at Galliard Homes’ TCRW Soho project. She paid £2.15 million (US$2.68 million) for the property. Encouraged by the successful transaction, Chiu proceeded to buy another flat at Orchard Wharf in London Docklands, where prices for one-bedroom units start from £460,000. Chiu acquired the second property in cash, and tenants were already occupying it just three days after she received the keys.
The timing of Chiu’s second purchase was fortuitous. The UK’s housing market has faced pressure due to the Bank of England’s monetary tightening and the previous year’s plummeting British currency following economic uncertainties. According to analysts, average home prices in the UK fell for three consecutive months, leading to a year-on-year increase of 5.5% to £288,000. The cooling of the market and discussions surrounding interest rates have prompted a cautious sentiment among buyers.
Property experts predict an overall decline of 9% in UK housing prices this year, with prime central London prices expected to experience a modest 2-3% decline. However, despite the market slowdown, the weakened pound has fueled interest among Hong Kong emigrants, who see an opportunity to secure properties at a discounted rate. The Hong Kong dollar’s peg to the US dollar enables potential savings of up to 3.3% or nearly HK$100,000 (US$12,800) due to currency fluctuations.
While some analysts believe that the decline in prices will decrease the housing supply and lead to buyer frustration, others suggest that prices will stabilize due to underlying demand for homes and fewer-than-expected forced sales. Property agency Chestertons predicts a slight dip of 3.2% in London property prices for 2023 but anticipates rapid growth of up to 10% in 2024.
As Hong Kong emigrants navigate their new lives in the UK, the allure of property investment during the housing market downturn has become evident. With rental demand remaining strong and limited new supply entering the market, many landlords have little incentive to sell. However, opinions among analysts regarding property sales in London vary, with some recommending investors take advantage of the active spring period to list their properties.
Overall, the current downturn in the UK’s housing market has provided Hong Kong emigrants with an opportunity to invest in real estate at more favorable prices. The weakened pound and market conditions have attracted investors seeking value for money and long-term prospects. While uncertainty remains a factor, the resilience of the housing market and underlying demand for homes indicate that the downturn may be a temporary phase, potentially leading to future price growth.