Emotional articles from lefty voters are perpetuating a belief dear to Labour and the left wing faction of the London Assembly. Boris Johnson is selling off London to absentee foreign investors! Bad Boris! Bad bad baby! The billions of foreign investment gained for London by our resourceful Mayor on successful trade missions are also regarded with horror by the Labour Party. What did Boris have to go out and do that that for? Why didn’t he do what Ken did, spend like Croesus and throw tens of millions of Londoners’ money away?The value of the foreign investment earned by Boris Johnson was explained in an article in CityAM by Allister Heath here.
The ultra reliable research team of Channel 4 Fact Check analysed the facts to see how true it is, if at all, that Boris is selling off London. The Fact Check report is here.
Fact Check investigate the claim that “ the capital is now home to hundreds of mansions left to rot by investors who are only interested in trading properties as assets, not living in them as homes.
Other reports have suggest that very large numbers of new overseas buyers are dominating the London property market, inevitably making housing less affordable for local people.
It’s a compelling narrative, but what are the facts?”
Knight Frank found that in the 12 months to June 2013, 49 per cent of sales of properties worth more than £1m in prime central London locations went to people born outside the UK.
But only 28 per cent of buyers were investors not resident in the UK.
Despite the myth of Russian oligarchs buying up the best addresses in central London like Monopoly pieces, Knight Frank found that only 9.1 per cent of the buyers of these high-end properties were born in Russia and the CIS and 4.9 per cent were residents of those countries.
Savills found that there’s no doubt that there is a lively overseas trade in London property. But most of this foreign investment activity takes place within a very-small sub-market of properties in prime central locations.
Across greater London as a whole, there is evidence that between 85 and 90 per cent of new-builds go to UK-born buyers.
Research from Savills on resales, rather than new builds, in the prime central London areas, does find an increase in foreign-born buyers in recent years.
But these are not historically high levels of overseas ownership. The 2014 figure of 38 per cent is the same as the 1990 level.
And this percentage is almost exactly the same as the proportion of Londoners who were born in a foreign country.
A housing bubble?
On BBC Question Time an overexcited Harriet Harman accused Sajid Javid, who said there was no housing bubble, of flat out lying. Channel 4 Fact Check explains that house price data gathered by the Halifax makes clear that a dramatically steep rise in house prices is distorted by inflation.
Across the country, it’s clear that prices have been rising over the last few years, as has the ratio between the average price and average earnings (the benchmark here is the average male full-time salary).
But the average property price and the average price-to-earnings ratio are still well below the pre-crash peak. In fact, things are about the same as they were in 2003. So Mrs. Harman owes the astute Mr. Javid a sincere apology.
This week, Ed Miiband declared he would attack “ghost investors” who buy up London property and then leave them empty. Allister Heath of CityAM points out the numbers are so small, it would be a pointless exercise.
CityAM also pointed out that Ed’s rent control plans would be a nightmare for tenants.