Chinese buyers fuelling UK housing shortage: Far East speculators price Britons out of market across the country
- Developers selling directly to buyers in China at inflated prices
- Critics said tactics threatened to deepen UK housing shortage
- British developers, including Barratt Homes, have opened offices in Beijing
- Manchester properties sold to Chinese for 30 per cent above market value
A huge property grab by Chinese investors is pricing UK homebuyers out of the market.
Developers are increasingly selling direct to buyers in China at inflated prices, cutting out domestic purchasers altogether.
Last night, critics said such tactics threatened to further destabilise the overheating property market and deepen the housing shortage.
A computer-generated image of the proposed development at the Ram Brewery in Wandsworth, London. The new Chinese owners of the historic seven-acre-site have openly admitted they will be targeting foreign buyers
Major British developers including Barratt Homes and Berkeley Group have opened offices in Beijing and Shanghai to cater for growing overseas demand for new-build apartments in premium city-centre locations.
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The phenomenon is not restricted to London. In Birmingham, 30 per cent of flats in the prestige development The Cube have been sold to the Chinese. Some investors have children studying at British universities.
Others simply see flats as a safe haven that offers significant rental growth. The Bank of China is also offering mortgages in sterling to Chinese investors.
CHINA GRABS HOUSE OF FRASER
House of Fraser, one of Britain’s oldest department store chains, is the latest UK household name to be sold to the Chinese.
The firm, which was founded by drapery store owners Hugh Fraser and James Arthur in Glasgow in 1849, has agreed the £450million sale with Sanpower, owner of a leading Chinese department store.
Sanpower plans to expand House of Fraser – which has 61 stores in Britain and Ireland as well as one in Abu Dhabi – into other countries. It has annual sales of about £1.2billion.
Brands recently bought by Chinese investors include Weetabix, black cab maker Manganese Bronze and James Bond’s tailor Gieves & Hawkes.
Also, Beijing Construction Group is part of a consortium investing £800million in Manchester Airport.
Michael Sacks of property development firm Sequre said: ‘New-build apartment blocks in Britain’s city centre are being bought en masse and then re-sold overseas, mostly to the Chinese, for significantly more than what they are actually worth.
‘This is causing acute shortages in the cities because entire schemes under construction are snapped up, making it harder for first time buyers to get on the housing ladder.
‘It will inevitably force up prices on second hand stock but this is artificial and not due to sound fundamentals.
‘This is reminiscent of 2007, just before the property crash, when people were buying property without doing their due diligence and simply believing the sales hype that the market is booming.’
He said that in northern cities such as Liverpool and Manchester, many new-build flats were being sold to Chinese investors for 25 to 30 per cent above market value.
Recent studies have revealed many parts of the country are in the grip of a house price bubble. Prices in some London boroughs have risen by 30 per cent in just a year. Other hotposts such as Manchester and Brighton have seen double-digit increases.
Last night, Liberal Democrat MP Simon Hughes called for tougher rules to prevent housing developers selling exclusively to overseas buyers.
He said: ‘I believe that it should be a legal requirement of receiving planning permission that these properties are advertised here first.’
Business Secretary Vince Cable admitted home ownership had become ‘unaffordable’ to the middle classes.
House of Fraser, one of Britain's oldest department store chains, is the latest UK household name to be sold to the Chinese
He warned that the bubble developing in the housing market could prove to be more serious than during the last property crash. Mr Cable said: ‘The fundamental problem is a chronic imbalance between supply and demand.
'A recovering mortgage market is just fuelling demand again. A family on an average income is nowhere near able to afford a house at the average price.’
He pointed out that the stamp duty net has been widened to catch more wealthy foreigners who buy homes in Britain through company structures to avoid tax.
Research by estate agent Savills found 51 per cent of prime Central London property was sold to overseas buyers in the last 12 months. This figure rose to 80 per cent for prime new-build properties in the capital.
In South London, the new Chinese owners of the historic Ram Brewery – a seven-acre site in Wandsworth – have openly admitted they will be targeting foreign buyers.
The £600million site will be turned into a new ‘town centre’ with 661 new homes, shops, bars and restaurants.
Last night, Liberal Democrat MP Simon Hughes (pictured) called for tougher rules to prevent housing developers selling exclusively to overseas buyers
But instead of supplying much-needed housing to local residents, it will be bought mainly by ‘rich and middle-class Chinese’, admitted Zhang Yuliang, the chairman of Shanghai-based developers Greenland Group.
Angela Lin of JA One, a firm helping Chinese investors to find property in London, said her clients saw the UK market as a ‘safe place’ to invest.
She said: ‘People in China want to invest in the UK because it has steady growth.’
But Adam Challis, head of residential research at Jones Lang LaSalle, said the trend should be welcomed.
He said: ‘After the economic downturn it became very difficult to secure this kind of investment.
‘So the reality is that it was the international investors who stepped in. As a result, there is more housing for British people, not less.’
New figures from Halifax yesterday showed prices rose by 8.7 per cent in the year to March, the highest rate of increase since October 2007.
HELP TO BUY SCHEME 'IS TO BE SCALED BACK'
A controversial scheme to make mortgages cheaper will be scaled back within months, a well-placed source has said.
The maximum purchase price allowed under the Government’s flagship Help to Buy scheme is to be cut from £600,000 to £300,000 to address ‘misplaced’ concerns that it is fuelling a house price bubble, senior figures believe.
Because the average cost of a house bought using the scheme’s mortgage guarantee is £148,048, they do not believe the change will have much impact on buyers.
Under the scheme, the Government guarantees up to 15 per cent of a homebuyer’s mortgage so long as they can muster a 5 per cent deposit themselves.
Business Secretary Vince Cable has claimed that backing purchases of up to £600,000 risks overheating the property market, but Chancellor George Osborne insists he has ‘not seen any evidence’ that Help to Buy is fuelling a rise in house prices.
A well-placed source said: ‘The Chancellor is under pressure to reduce the maximum value of the properties that can be bought and if he’s advised to do it by the Bank [of England] there is speculation that he will do so in his Mansion House speech in June.’
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