The collapse of Iran’s currency has dramatically reduced the purchasing power of its buyers in London, with the cost of a typical property rising by almost 3,000% in local currency terms since the start of the latest Middle East conflict.
Research from Benham and Reeves shows that the average London home, priced at £554,422, now costs the equivalent of Rial 965.9bn, up from just Rial 31.5bn at the end of February.
The sharp increase reflects a rapid depreciation of the Iranian Rial against the pound, underlining how geopolitical instability can reshape global property demand through currency movements.
While Iran has seen the most extreme impact, the picture across other international markets is more mixed. Cyprus is the only other market affected by the conflict to see its currency weaken slightly against the pound, increasing costs for buyers by 0.72%.
IMPROVED EXCHANGE RATES
In contrast, buyers from several key overseas markets have benefited from favourable exchange rate movements, effectively reducing the cost of purchasing London property. Iraqi buyers saw costs fall by 1.64%, while those from Oman, Jordan, the United States and the UAE also saw modest improvements.
Over a longer 12-month period, currency strength has improved affordability for buyers from Australia, the Eurozone and China, despite broadly stable house prices in London. However, Indian and Hong Kong buyers have seen costs rise, reflecting weaker currency performance against sterling.
WEALTH PRESERVATION
Marc von Grundherr (main picture), Director of Benham and Reeves, says: “London has long been viewed as a safe haven by international buyers and this is particularly true during periods of geopolitical and economic uncertainty.
“What this research highlights is just how quickly global events can alter purchasing power and, in the case of Iran, the collapse in the value of the Rial has dramatically reduced the ability of buyers to purchase international assets such as London property.”
STRONG DEMAND
He adds: “At the same time, we continue to see strong demand from many of our core overseas markets across Asia and the Middle East, where currency movements and London’s long-term stability continue to make the capital an attractive destination for investment.
“For many international buyers, London property is not simply a lifestyle purchase, but a means of preserving wealth and gaining exposure to a market that remains one of the most secure and desirable in the world.”
