The Power of Cash Buyers

Why Cash Buyers are proving to be a popular option with sellers in the current property market

Funding a property purchase with cash has never been more appealing than during a cost-of-living crisis with high inflation and rising interest rates.

When you can afford to buy a property without a mortgage or loan, it means the buying process will be a lot quicker. A cash buyer is often more attractive to sellers who might even consider accepting a lower offer, because it will be a less complicated and speedier transaction. In addition, a cash purchase is chain-free and not dependant on borrowing from a mortgage lender - with an offer that is likely to have an expiry date.

According to recent industry research, cash buyers were able to secure properties 6% under the UK average house price, equating to a £15,162 saving, compared to paying 3% more, or an extra £7,596, when paying with a mortgage. Comparing the average house price when paying with cash instead of a mortgaged transaction, there is a saving of 8%, which amounts to £22,758.

Overall, this new data is suggesting that cash buyers are spending on average £21,384 more than they did one year ago to buy the home of their dreams. By comparison however, those buyers purchasing a property with a mortgage, ended up spending on average £25,347 more than they did last year. Which is a great indication of the strength held by cash buyers when it comes to negotiating a price on a property purchase.

The appeal of cash buyers in the current market is particularly strong at the present time, which has seen mortgage rate rises and lending offers being withdrawn. Figures show the time it takes from a buyer instructing a conveyancing firm to exchanging on a new property is now 90% longer in some parts of the country than in 2007, with a national average of 132 days per transaction.

This indicates now more than ever, that the market is particularly favourable to cash buyers, because of their ability to give sellers the speedy and uncomplicated sale that is especially enticing in today’s volatile mortgage market.

Encouragingly, the analysis shows that the volume of cash buyers across England is broadly in-line with levels seen before the pandemic, prior to the housing market frenzy in 2021 that saw record volumes of transaction levels overall. It would also seem, that a large number of cash buyers typically seem to be homeowners who have built up equity in the family home over the years and as their children leave the nest, downsize and buy somewhere that better suits their needs now. This appears to be increasingly more apparent when a property was bought back in the 1990s, at a time when house prices were much lower. The money raised from selling their home can then be used to buy a property outright, whilst still giving these cash buyers sufficient capital to boost their retirement and provide a comfortable lifestyle.

Research also showed that mortgaged buyers paid the highest premiums in the South East of England, spending on average £32,832 more on their property purchase year-on-year compared to cash buyers. As one of the UK’s busiest and most saturated markets, the South East continues to command the highest asking prices in the UK at £403,515. Whereas in London the average property is valued at £667,600.

As Spring approaches, we are expecting more properties to enter the market. To look for a new home, please register your details on our website. If you are interested in selling your property, please call your local David Andrew Office today for a free market appraisal on 020-7619-3750 (Archway), 020-7354-9111 (Highbury) or 020-7281-2000 (Stroud Green), or email info@davidandrew.co.uk . We look forward to hearing from you!