LONDON (Thomson Reuters Foundation) - Wealthy foreigners are spending billions of pounds on homes near London’s top private schools, even as demand for prime property in the British capital falters, new research has found.
Overseas parents spent about 2 billion pounds ($2.6 billion) on prime property near London schools over the past year, according to a report published on Wednesday by global property firm Knight Frank. Most were from China or Russia.
“Our analysis shows just how important the standard of top London schools is to wealthy international individuals and the demand this contributes to the London property market,” said Liam Bailey, global head of research at Knight Frank.
Property prices in London have long been swelled by foreign investment, making living in the city unaffordable for those on lower incomes, although price growth has slowed since Britain voted in a 2016 referendum to leave the European Union.
Anthony Breach, analyst with the British think-tank Centre for Cities, said foreign ownership was exacerbating a broader lack of affordable housing in Britain’s capital.
“We need to build more housing, then more people could benefit from London’s strong economy and schools,” said Breach. “The supply of housing is not matching the demand.”
Knight Frank said political pressures coupled with an increase in taxation on high-value properties had put significant pressure on London’s luxury housing market.
But parents were still purchasing property in the capital while their children attend school. “Education is the driver,” Bailey told the Thomson Reuters Foundation.
“This is a sector which in terms of its appeal to a global market appears to be pretty much unaffected by Brexit ... and has remained very robust,” he said.
Prices have fallen by between 10 and 20 percent over the past three years at the top of the London market, according to Knight Frank’s report.
Bailey said lower property prices and a weakened pound may be attracting foreign parents to buy in London.
“Given the potential 10-year span of education for children that come over as young as 11 or 13, many of these parents are looking at a longer term commitment as opposed to a short term investment,” he said.
Knight Frank said the motivations for parents included the quality of education in Britain and the perceived boost to university and job prospects offered by attending prestigious London schools.
The most popular countries to send children to school after Britain were the United States followed by Canada and other European Union countries, the report found.
London Mayor Sadiq Khan has set ambitious targets to tackle a chronic housing shortage, undertaking a London-wide house building scheme of 650,000 new homes by 2029 - more than double the current rate.
Reporting by Adela Suliman, Editing by Claire Cozens. Please credit the Thomson Reuters Foundation, the charitable arm of Thomson Reuters, that covers humanitarian news, women's rights, trafficking, property rights, climate change and resilience. Visit news.trust.org