Cash purchasers, needs based buyers and relocators keep prime market steady

Cash purchasers, younger needs-based buyers and relocators are the driving force behind the current prime UK property market, according to research from property firm Savills.

Savills’ latest research of prospective buyers and sellers of prime property, reveals that commitment to move remains higher than at the back end of 2022, with a net balance of +24% looking to move in the next year (vs. only +7% in August 2022 and +21% in November 2022).

However, overall sentiment to move has fallen from April of this year (+32%), given renewed concern over rising interest rates and the wider economic outlook.

“Buyer and seller sentiment remains more positive than at the back end of last year when confidence took a significant dip. The bulk of this desire to move – especially in the short term – is coming from those aged 40 and below, who are most likely to be needs-based buyers looking to relocate for work, or looking to rightsize their home to better suit an expanding family,” comments Frances McDonald, director of research at Savills.

Gap between cash and mortgage buyer motivations widen

According to Savills there is also a clear distinction between cash and mortgage buyer motivations, with the short-term (three-six months) sentiment of those looking to take on more than 50% debt falling by a net -5% since April 2023, vs +16% of cash buyers looking to move in this period.  

In terms of budgets, the majority of respondents say that they are keeping their budget and source of funding the same, however, 22% say that they have decreased their budget in light of rising interest rates and the increased cost of living.  

But again, there is a notable split between cash and mortgaged buyers. The vast majority (72%) of cash buyers have kept their budgets the same whilst almost 60% of those using >50% debt have reduced their budgets.

“Cash buyers who are not exposed to concerns around rising interest rates have been able to drive ahead strongest in the current market – with a lower proportion of those buying at the top end (£2m+) stating that they have reduced their budget (18%) this month. As a result, established prime markets most synonymous with equity-rich buyers are holding up the strongest amid mortgage market turbulence.

“But, we have also started to see some confidence return for short-term fixed-rate mortgages. More than a third (35%) said that they would opt for a two-year fixed – vs just 23% in November – despite increases in the cost of mortgage finance through June and the first half of July,” continues Frances McDonald.

Increased family support 

When asked if recent changes to the economic backdrop have made them more inclined to help family members out financially, a net balance of +22% agreed.

While 2 in 5 plan to use the equity released from a property sale, the majority (58%) plan to use “other funds” for this support.

The vast majority (62%) specifically plan to help those who are getting onto the housing ladder for the first time.