In a surprising turn for the UK housing market, demand for property from overseas buyers has dropped to its lowest level in over a decade. Property experts are watching closely as international investment continues to decline to see how this trend will affect key markets, especially in prime areas such as London.

What’s the decline?

According to new data released by estate agency Hamptons, the proportion of homes purchased by overseas buyers in Great Britain fell to just 0.9% in the first quarter of 2025, the lowest level since records began in 2010. In London, the drop is even more significant, with foreign buyers accounting for only 3.2% of purchases, compared to nearly 7% during the same period in 2016.

The figures also show a decline among cash buyers, often dominated by international investors. The share of foreign cash purchases now stands at just 1.4%, highlighting a broader retreat from the UK property market.

Why is it happening?

Several factors are driving this slowdown. The pound's strengthening has made UK property more expensive for overseas investors. With increasing interest rates and tighter visa restrictions, the appeal of UK property is waning for many global buyers.

Taxation changes are also contributing to the problem. Since April 2021, non-UK residents have been subject to a 2% stamp duty surcharge, which adds to the overall cost of buying. With returns already squeezed by global economic uncertainty, many investors are now looking elsewhere.

Is it a temporary trend?

Some analysts suggest that demand could recover later in the year, particularly if interest rates begin to ease, whilst others believe the trend may persist. Unless there is a shift in government policy on taxes or visa access, the UK may continue to see muted interest abroad.

In the meantime, the domestic market appears more active. Local buyers benefit from reduced competition and slight property price adjustments in some regions.

What’s the impact on the UK property market?

The decline in international interest is likely to have mixed consequences. Reduced overseas investment in high-end markets, especially central London, could place downward pressure on prices. Developers focusing on luxury apartments and foreign clientele may find selling units more difficult or justifying premium pricing.

On the flip side, first-time buyers and domestic investors may find new opportunities. With fewer international cash buyers competing for stock, more homes may become accessible to UK residents, particularly in areas previously dominated by foreign demand.

As overseas interest reaches a record low, all eyes are now on government policy and interest rate decisions. Whether this shift is a short-term cooling or a longer-term trend remains to be seen.

References:

https://propertyindustryeye.com/demand-for-uk-property-from-international-buyers-hits-record-low/