27 Mar Cash buyers and first time buyers dominating UK property sales market
Cash buyers and first time buyers in the UK are more active than any other buyer groups and are driving growth in both housing market transactions and prices, new research shows. The fact that number of cash buyers grew by 33% and the number of first time buyers with a mortgage grew by 23% means that fewer homes are coming onto the market, increasing supply demand anomalies, according to residential agents Hamptons International.
It points out that in 2013 some 350,000 properties were purchased with cash, equating to 36% of the market in England and Wales, the highest number since 2007. Meanwhile, 28% of the market was accounted for by first time buyers with mortgages.
‘Cash buyers have been at the vanguard of the housing market recovery in recent months, with the number of cash buyers increasing at a faster rate than those purchasing with a mortgage,’ said Johnny Morris, head of research at Hamptons International.
At a time when the number of properties available to buy is 5% lower than this time last year, and 20% in London, Hamptons International’s research highlights how the increased activity of cash and first time buyers is an important contributory factor to the shortage of stock.
It says that while some cash buyers, such as downsizers, will release a home for sale at the same time, so there is no net effect on the stock of property for sale. So others, such as second home buyers or buy to let investors, snap up available stock for sale, without adding to it, at least in the short term.
Hamptons International’s research shows that 70% of cash buyers in 2013 weren’t selling a property to fund their purchase at the point of sale.
‘The increase in numbers of first time and cash buyers without a property to sell has meant fewer homes coming to the market. Low levels of stock have been a factor driving rapid price increases, particularly in the South of England,’ explained Morris.
‘Until we see more owners moving home, who have properties to sell as well as buy; the shortage of homes for sale is likely to continue. The result being that 2014 looks to remain, resolutely a sellers’ market,’ he added.