New data from Yopa, the full-service estate agents, reveals that cash buyers have reached the highest level of market activity in the past decade. In 2023, cash buyers accounted for 34.5% of all property transactions, with nearly a third of purchases so far this year made by cash buyers.
Historical Data and Recent Trends
Yopa’s analysis of the split between cash and mortgage homebuyers over the past decade shows that the proportion of cash buyers last year was the highest since 2013. In 2013, the proportion of cash buyers was 33.5%, and in 2014 it was 33.3%. In contrast, the years 2019 to 2022 saw the proportion of cash buyers fall below 29%.
So far in 2024, cash buyers have accounted for 32.8% of market activity, as higher mortgage rates continue to challenge those looking to purchase with a mortgage.
Impact of Mortgage Rates
Verona Frankish, CEO of Yopa, commented, “Mortgages have become increasingly more expensive since interest rates started to climb, and we’re now seeing the result of higher borrowing costs when it comes to buyer trends within the market. Not only is it far tougher for those looking to purchase with the aid of a mortgage, but as a result, cash buyers are in a far stronger position within the market, making them the first choice for many sellers.”
Future Expectations
Despite the current dominance of cash buyers, there is optimism for the future. “The good news is that there is light at the end of the tunnel, and the broad expectation is that interest rates will start to ease this year. As they do, we expect the market will return to a greater degree of normality when it comes to the cash versus mortgage buyer balance,” Frankish added.
Broader Implications
The rise in cash buyer activity highlights the challenges faced by mortgage-dependent buyers, particularly first-time buyers and those looking to move up the property ladder. This shift in buyer trends is a direct response to the increased cost of borrowing, which has made it more difficult for many to secure a mortgage.
The significant presence of cash buyers in the current market reflects the impact of high mortgage rates. However, with anticipated reductions in interest rates, the market is expected to rebalance, offering more opportunities for mortgage buyers. This trend underscores the importance for UK landlords and property sellers to stay informed about market dynamics and remain flexible in their approach.
