Exactly what the next few years have in store for house prices remains to be seen. But what seems like a foregone conclusion in the eyes of most market watchers is a fairly significant fall in average house prices.
Savills recently predicted a 10% drop in 2023, while Knight Frank has forecast a 10% fall over the next two years. Elsewhere, Credit Suisse and Capital Economics have both projected a fall of between 10% and 15% within the next 12 months.
The consensus, therefore, appears to point to a fairly turbulent year to come for home sellers, at least for those looking to get the best possible prices for their properties. Average house prices are unlikely to get any higher than they are right now, seemingly making now the time to sell before any further declines creep into the mix.
Not only is this exactly what many are doing, but it is becoming commonplace for home sellers to set their sights primarily (if not exclusively) on cash buyers.
Chain-free sales
To hang around and wait for a potential 10% drop in property prices could prove catastrophic for anyone pursuing maximum capital gains. As a result, more home sellers than ever before are demonstrating enthusiasm (if not desperation) where selling their properties quickly is concerned.
A growing contingency of UK sellers is accepting inquiries and offers only from chain-free buyers, who can purchase their homes outright for cash.
The results of a recent survey conducted by mortgage broker MPowered found that as many as two-thirds of UK home sellers are only interested in offers from chain-free buyers. In addition, almost 30% said that they would charge higher prices for their homes if they sold them to standard mortgage-reliant buyers.
What this adds up to is a property market where those who are able to purchase homes outright for cash have a major advantage over competing bidders. Not just in terms of beating them to the punch, but also in their access to exclusive deals and discounts on property prices.
Traditionally, it has been practically impossible for everyday homebuyers to access the benefits afforded exclusively to cash buyers, but as the market for bridging finance continues its expansion, more mainstream buyers than ever before are empowering themselves with cash-buyer capabilities.
Bridging finance for fast property purchases
Escaping property chains and funding fast home purchases has become the number-one use for bridging loans in the UK. With bridging finance, the funds needed to purchase a property for cash can be raised within a few working days. Bridging loans are short-term products issued over terms of 12 months or less and secured against assets of value (typically residential or commercial property).
As mortgage rates continue to head ever-skyward, average bridging loan rates remain close to historic lows. Current deals are averaging just under 0.5% per month, equating to an APR of around 5.6%. But as the vast majority of bridging loans are repaid within a few months, bridging finance can work out exponentially more cost-effectively than any comparable mortgage.
Bridging finance is therefore providing home buyers from all backgrounds with a welcome lifeline—one that enables them to compete with the market’s more established cash buyers. Rather than being denied access to a sizeable chunk of the property market (and paying over the odds), anyone who can qualify for bridging finance can access all the benefits of purchasing homes for cash.
For more information on any of the above or to discuss the potential benefits of bridging finance in more detail, call anytime for an obligation-free consultation.