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. Last Updated: 07/27/2016

BRIC Demand Fuels British Prices

APDemand for property in Britain is soaring on the back of a stable economy and advantageous tax breaks.
LONDON -- Demand from foreign investors -- particularly those from emerging economies -- will support British house prices in the next few years, a report predicts.

Overseas buyers are an increasingly important source of demand for residential property in Britain, and have contributed to rocketing prices in the past decade, according to research by estate agent Knight Frank.

Within the prime central London market, foreign buyers currently account for around one-third of all transactions -- a figure that rises to 75 percent for properties valued at more than $9.75 million.

The rapid growth of emerging economies, particularly the so-called BRIC counties -- Brazil, Russia, India and China -- is leading to "wealth creation at unprecedented levels around the world, some of the effects of which are being felt in the U.K. residential market," Knight Frank said.

A robust and deregulated economy, stable political environment and advantageous tax regime will continue to attract overseas buyers, it said in its "BRICs and Mortar" report.

"Average house prices in central London have tripled in the decade to 2006, a substantial part of this increase being due to the presence of overseas buyers in the prime locations, diminishing the overall available housing stock," said Liam Bailey, head of residential research.

"We believe that U.K. tax, regulatory and financial pull factors will encourage continued growth in buyer demand from the BRIC nations."

It predicts that Russian buying activity in Britain will rise by 10 percent per year in the next two years, driven by the growth of wealthy individuals and uncertainty surrounding the country's 2008 presidential election.