A significant one in three home buyers in the U.K. will pay cash for their property purchase in 2023, according to a report Monday from Zoopla.
Cash buyers will make up 32% of buyers across the nation by the end of the year, a notable jump from the average 20% share they’ve held for the past five years, the online property portal said.
That figure represents buyers from across all price points of the market, but a cash purchase is typically a luxury more readily available to the wealthiest of buyers.
“The U.K.’s property market, particularly at the higher end where properties cost a minimum of £1 million (US$1.21 million), has seen a noticeable boost in cash buyers over the past year,” said Nigel Bishop of nationwide buying agency Recoco Property Search. “This increase has been driven by less favorable interest rates and, with rates unlikely to decrease any time soon, will continue in 2024.”
Those who are dependent on mortgages though—and who are already battling those high interest rates—will have another hurdle if the number of cash buyers continues to grow, he said.
“The presence of more cash buyers could create further challenges for buyers who are reliant on a mortgage, as some sellers favor cash transactions for their chain-free nature which often results in an overall faster sales process.”
The high cost of borrowing is not only driving more buyers to opt to fund their buy with cash, it’s also rapidly cooling home prices across the U.K. resulting in the “most dramatic slowdown in price growth since 2009,” Zoopla said.
Property prices, which were up 9.2% a year ago, are now down 1.1% today and year-on-year price falls have been registered in 80% of the U.K.’s housing markets.
Source : MansionGlobal