Buyers in the financial hub have long been a driving force in the London property market, and a special visa programme that opens the door for millions to win permanent residency in Britain has ramped up sales.
Interest spun into overdrive as the pound’s descent in the past year turned into a dive after the British government announced historic, but unfunded, tax cuts aimed at jolting the moribund economy. Last week, sterling hit an all-time low against the dollar at US$1.0327 in the wake of Downing Street’s “mini-budget”.
“These past couple of weeks, there have been more and more people inquiring about property in England. It’s because the pound has dropped and the British government’s recent announcement of the abolition of stamp duty on new homes,” said Matthew Au, a UK real estate expert at Red Brick Property. “There have also been more and more people signing up for our (investment) talks too.”
Other agents confirmed the surge of interest as the currency’s slide benefits buyers holding Hong Kong dollars, which are pegged to the greenback.
Hong Kong has seen an exodus of residents and expatriates as more than two years of some of the world’s toughest Covid-19 rules left the city isolated, and after Beijing tightened its grip following mass street protests in 2019.
The city’s population dropped to 7.29 million at the end of June from 7.5 million in mid-2020.
Also driving the trend is the British National Overseas visa programme, which has granted more than 151,000 people in Hong Kong a path to live in the UK since it launched at the start of last year.
The plan was a rebuke to a Beijing-imposed security law which effectively criminalised protest and freedom of speech in the city.
Under the scheme, an estimated 2.9 million Hong Kong residents who had lived in the city during British colonial rule, along with their dependents, could be eligible to stay in the UK for up to five years and eventually gain citizenship.
More Hong Kong residents are likely to move after the city recently dropped its mandatory hotel quarantine rule, making it easier to travel back and forth, with many eyeing investment properties or a British education for their kids.
It was a “great time” for Hong Kong property buyers, said Dickie Wong of Kingston Securities.
“This is an obvious opportunity,” he added, referring to the weak pound. “It’s hugely beneficial if you’re planning to migrate, move to England with your children or send them overseas to study.”
Meanwhile, foreign exchange operators say they have also seen a rush of people converting their Hong Kong dollars into sterling over the past week.
But the pound has gained ground after the government reversed course on scrapping the country’s highest income tax rate.
And it remains to be seen if currency weakness will trigger a surge in actual property transactions.
The weak pound “attracts many newcomers to the market who have just started doing preliminary research”, said Widya Lestaluhu, director head at British property consultancy Benham & Reeves in Hong Kong. “It will also take some time for them to have sufficient knowledge before reserving, as there are many options in the market as well.”