UK unlikely to halt charm offensive

Source:Reuters Published: 2014-4-16 21:33:01

Since UK residential property prices bottomed in March 2009, intense overseas interest has pushed up average values in Kensington and Chelsea - the hub of prime central London - by 75 percent, Land Registry data show.

But foreign cash may now be rippling out to different neighborhoods. Over the last year, prices in Kensington have fallen 5 percent, Rightmove estimates. Over roughly the same period, the Chinese mainland buyers have bought 7.5 percent of the properties costing less than a million pounds, up from 2.7 percent in 2010, according to Knight Frank.

The wave of Chinese capital is only likely to grow. The big question for George Osborne, the UK chancellor, is whether this matters.

Osborne could strike back. The UK has tried to cool its property bubble, bringing in capital gains tax for foreign investors and a 15 percent stamp duty rate for foreign investors who buy through corporate shell companies.

Aspiring London-based home buyers shouldn't get their hopes up, though. Osborne has been enthusiastically visiting China, allowing the country's banks to establish more UK branches, and granting more visas to rich Chinese individuals.

The author is George Hay, a Reuters columnist.

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