Recent figures show that property sellers are substantially cutting the asking price on their properties by up to £150,000. But not just for anybody. It seems that sellers are knocking huge amounts off their property to attract cash buyers for a quick and simple sale. As getting a mortgage becomes more and more difficult as the economy struggles, the likelihood of mortgages being and offered has decreased.
A property sale/purchase in the UK now takes an average 153 days to complete, a large increase compared to the previous few years. That doesn’t just include getting a mortgage (which still can only take a couple of weeks, but includes things like surveys, property chains, and solicitor legal paperwork taking much longer to complete. It is perceived by many sellers, that a cash purchase will eliminate the mortgage application side and potentially the property chain if the buyer is not looking to sell their own property first.
Estate agent comparison website GetAgent, who have released these recent figures, have said that the average asking price that sellers are listing their homes for in London is £486,931. However, people who are specifically looking for cash buyers rather than mortgage buyers are listing their London properties on average at £335,680.
An over £150,000 discount for people able to or willing to put down the cash immediately rather than go through the whole mortgage process. That of course means that the London property market could eventually lean towards wealthy property investors or businesses rather than offering up as many properties to regular mortgage home buyers.
GetAgent goes on to say that outside of London, sellers wanting only a cash buyer for their properties on average listed their properties at £186,768. Those not too concerned about mortgaged buyers on average listed their properties at £256,373 That is a discount of almost £70,000, or 27%, for those ready to purchase with cash versus those funding their transaction with the help of a mortgage. An almost £70K discount in favour of cash buyers.
What GetAgent Are Saying
Discussing these interesting figures, Colby Short from GetAgent has commented:
“Although the market has shown signs of cooling after what has been a manic pandemic property boom, the current landscape is still frantic, to say the least, and there remains a very high level of buyers looking to transact. As a result, sellers are still accepting offers at an alarming speed, but there remain some lengthy delays when it comes to getting a sale through to completion. One way of bypassing this to an extent is with a cash buyer and it seems as though some sellers are willing to dramatically lower their asking price in order to secure this easier path to completion.”
What The Mortgage Experts Are Saying
Louis Mason from Oportfolio Mortgages in Putney, South West London had this to say:
“These figures are troubling to me in a way. Of course, if you are downsizing and have cash to buy a smaller property, or perhaps you have cashed in a pension to buy a property in cash and remain mortgage free, this should be something that you deserve to do. However, I do worry about the wealthy businesses or individuals who are snapping up property (especially in London) just for investment purposes. Again, a valid investment and something that a lot of people have worked hard to be able to do however, we must think about the impact that has on people who just want to own their own property.
With cash buyers starting to dominate the market, and being incentivised to by lower asking prices, we risk first time buyers and home moving families being priced out of the market. Arguably the already are priced out of the market in a big part of the country, but this will surely make it worse. Generation rent will become bigger and wider as the properties are all snapped up at low asking prices and people will be forced to rent for their entire life.
Maybe its time for seller to start thinking about how much their property is actually worth and who they are selling their homes to. Lets not incentivise cash buying and invest more of our interest in helping people to move on to/up the property ladder and sell our properties for what they are actually worth!”
If you or someone you know is trying to buy a property but feel they are struggling to find the right home, we work closely with estate agents and can help you make your way out of generation rent. Please give our team a call today to see how we can help.