LONDON: An influx of cash-rich Hong Kong buyers is barely making a dent in London’s ailing luxury property market.
Hong Kong buyers quadrupled their proportion of purchases of homes in London’s wealthiest areas last year, snapping up almost one in 10 sold, according to a report from estate agent Hamptons International.
Still, overall sales of luxury properties tumbled 13% as the pandemic spurred the richest buyers to look to the countryside.
The figures show that even if Hong Kong residents are a home-buying force, the expected flood of immigration from the former colony may not be enough to counter the larger impact of a pandemic on the market for the capital’s priciest homes.
“For 8% of purchases in prime central London to come from Hong Kong buyers is quite remarkable” considering its size, said Aneisha Beveridge, head of research at Hamptons. Still, “I don’t think we’ll see much recovery in prime central London this year” as the pandemic effect lingers, with 2022 looking more positive for the market, she said.
One of the key factors driving interest is the UK government’s new immigration route for Hong Kong residents that opened last month, as China moves to curtail dissent in the city.
The Home Office expects around 300,000 people to take advantage of the new pathway and relocate to Britain over the next five years. “We’re starting to see signs of that within these numbers, ” Beveridge said.
The UK government’s plans to make it easier for Hong Kong residents with British National (Overseas) status – some 2.9 million of them plus 2.3 million dependents – to become UK citizens has raised hopes they might support London’s property market in its time of need. More Hong Kong residents received BN(O) passports during the first 10 months of 2020 than any annual figure since the 1997 handover.
The pandemic slammed demand for top-end homes last year, sending Londoners looking to ride out the lockdowns to more spacious houses outside the city. The downturn also weighed on London apartments as new home sales tumbled 27% in the fourth quarter from a year earlier, according to Molior London.
Meanwhile, the rest of the country has enjoyed a boom, with the average home costing more than a quarter of £1mil (US$350,000) for the first time on record in December.
London faces more headwinds in April, when a tax break on home purchases expires and a levy for overseas buyers increases. A stream of new migrants with money would be a well-timed boost.
“A few developers will be seeing this as their way out of a sticky situation, ” said Yolande Barnes, a researcher at University College London. “Hong Kong demand is kind of the perfect demand to fill the place of people who were looking for modern city apartments.”
Still, many of the newcomers may not be wealthy enough to buy the modern London flats Hong Kong buyers tend to be associated with, opting to rent instead, Barnes said.
That’s the case for Lincoln Chong, 26, who moved to the UK in December to study after protests rocked the city and is now staying with relatives in east London. He’ll apply for a BN(O) visa and stay in the UK if he gets a job, and will rent until he can buy a home.
“Our generation feels a bit hopeless and gloomy toward the future of our city, ” Chong said in an interview. Property was out of reach for many even before the political turmoil that engulfed Hong Kong, which has the least affordable housing market in the world, according to a survey by Demographia.
“If you ask anyone in Hong Kong they will complain about the housing crisis – I don’t think anyone of my age with a basic salary can afford a flat, ” Chong said. — Bloomberg