Iran currency collapse makes London property a winner for some as global buyers continue to view capital as safe haven

The latest research from Benham and Reeves has revealed that the cost of purchasing the average London home has surged by almost 3,000% for Iranian buyers since the start of the current Iran conflict, highlighting how geopolitical tensions can dramatically reshape international property demand through currency volatility.

Benham and Reeves analysed currency fluctuations against the British Pound since the start of the current Middle East conflict, examining how movements in exchange rates impact the cost of purchasing a London property for international buyers. The analysis also looked at how currency movements over the last year have influenced affordability across a number of key global markets that regularly invest in London real estate.

Impact of the Iran conflict

The research shows that, based on the current average London house price of £554,422, the cost of purchasing a London property has increased by 2,970.3% for Iranian buyers since the conflict began on 27th February.

The dramatic shift reflects the severe collapse of the Iranian Rial against the pound during this period, with the average London home now costing Rial965.9bn, compared to Rial31.5bn at the start of the conflict.

However, periods of extreme currency volatility are not uncommon in Iran, where sanctions, high inflation, and long-standing economic pressures have historically placed considerable pressure on the Rial.

Cyprus is the only other nation impacted by the current conflict to have seen its currency (Euro) weaken against the pound during the same period, with the average London home now costing 0.72% more when compared to 27th February.

Across the remaining markets analysed, currencies have generally strengthened against the pound, effectively reducing the cost of purchasing London property.

Iraq has seen the most notable improvement, with the cost of the average London home falling by 1.64% when converted into Iraqi Dinars. Buyers from Oman, Jordan, the United States, and the United Arab Emirates have also seen the relative cost of purchasing London property fall by around -1.61% to -1.62% due to favourable currency movements.

Wider global picture

Benham and Reeves also examined how currency shifts over the last year have influenced the cost of purchasing a London property for buyers across a number of major international markets.

While the average London house price has remained largely unchanged over the last year, the combined effect of stable pricing and stronger foreign currencies has reduced the cost of purchasing London property for some international buyers.

Australian buyers have seen the largest reduction in the cost of purchasing a London home at -5.98%, followed by buyers from the Eurozone where the cost has fallen by -3.78%. Chinese buyers have seen a reduction of -2.0%, whilst Canadian and Singaporean buyers have also seen modest improvements in affordability at -0.55% and -0.54% respectively.

However, not all markets have benefited from these currency movements. Indian buyers have seen the largest increase in the cost of purchasing London property over the last year, with the average home now costing 12.69% more in Rupee terms, whilst buyers from Hong Kong SAR have seen costs rise by 3.5%.

Director of Benham and Reeves, Marc von Grundherr, commented:

“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.

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.”