Overseas investors “push up prices”

Overseas investors “push up prices” (Image credit - iStock)

Overseas investors putting their money into the UK property market have played a key role in driving up values, claims new research.

A study conducted by the School of Management and Business at King’s College London concluded foreign property investors have affected growth in key areas over the past 15 years.

As well as influencing values in London and the South East, other cities such as Liverpool, Leeds and Manchester have seen a rise in prices as a result of overseas money being invested.

The research was based on Land Registry figures and shows the average UK house price is now £215,000 but would have been around £174,000 without foreign investment in the market.

In particular, it is not just prime properties that have benefited from the strong overseas interest, with all forms of homes seeing a rise in value due to a “trickle down” effect.

“One of the factors behind house price growth in countries such as the UK, Australia and Canada is demand from foreign investors. This study looks at data for the UK and argues that foreign investment had a significant and positive effect on house price growth in the last 15 years,” said Professor Filipa Sa.

She added the study had highlighted foreign investment could reduce home ownership rates because in some regions local residents may have been priced out of buying and have opted to rent or relocate to more affordable areas.

London’s mayor has recently announced plans to examine the impact of foreign property ownership in the city and there have been calls for policies to be introduced to control overseas investment in the UK housing market.