Rich foreigners buy fewer London homes

The number of foreign buyers for many expensive properties in central London has fallen by more than two-thirds as a result of the credit crunch.

Figures released by estate agents Savills show the number of overseas purchasers for homes in the £1million - £2million price bracket dropped by 68 per cent in the first six months of this year compared with the same period last year.

For properties under £1million, the number dropped by almost three quarters.

The proportion of foreign buyers in these price brackets dropped from almost half to 16 per cent.

Homes priced at up to £2 million are favoured by overseas workers in City finance, who rely on bonuses and market fluctuations.

Buyers of more expensive properties are less vulnerable to the credit squeeze. The drop may also reflect a trend among staff at some companies, particularly Americans, to rent homes when in London while conditions remain uncertain on both sides of the Atlantic. The number of US buyers in all price brackets dropped from 11 to eight per cent during the same period.

The figures reveal the proportion of foreign buyers increased with the price. So far this year, 30 per cent of homes costing over £2 million went to overseas buyers, rising to 41 per cent for properties valued at more than £4 million.

The biggest change in buyers' profile from last year has been the fall in the number of Russians from six per cent to five. The number of properties sold to owners from the Middle East rose six per cent.