Where is Cash King?

Latest market insights from Jackson-Stops
- Cash buyers are now spending £31,700 more than pre-pandemic to secure a property, rising to £40,800 in the SW
- Number of cash buyer transactions bounce 12% YOY, outstripping pre-pandemic rates
- Cash purchasers pay 99% of the average price paid in the SW compared to 91% in the NW
- Market analysis reveals the most saturated housing markets across England, with the SW topping the charts

 
New market analysis, undertaken by national estate agent Jackson-Stops, has revealed an increase in the prevalence of cash buyers across England*. According to statistics from the Land Registry House Price Index there has been a 12% bounce in cash purchasers YOY across England, with the volume of transactions for 2021 also outstripping pre-pandemic rates (see Graph 1). The same statistics show cash buyers are also willing to dig deeper than before, spending on average 15% more nationwide than pre-pandemic, equating to an additional spend of £31,700 per purchase (See Table 1).*

This trend is being driven by an imbalance between supply and demand across the English housing market and is causing fierce competition amongst buyers. The latest analysis of Jackson-Stops’ nationwide sales data shows that there are currently 19 buyers chasing every newly listed property across the country, an increase of 64% from the previous year**.

What’s more, in the most saturated markets, cash buyers are purchasing closer to the region’s average house price than previously. Historically, cash buyers achieve a discount when purchasing properties due to their favourable buying position. However, in some areas of the country, such as the South West, cash buyers are now only receiving a 1% discount on the average price paid for a property.

The South West is currently the most saturated housing market, with 23 house hunters for each new home listed. This is followed by the South East which has 17 buyers chasing every newly listed property. Meanwhile, there are just 12 buyers for every new home in Yorkshire and The Humber.

Nick Leeming, Chairman of Jackson-Stops, comments: “Across our portfolio there is currently an average of 19 buyers available to purchase every newly listed home. In a competitive market, speed is paramount and how quickly a buyer can proceed is often what will clinch a sale with vendors. A cash buyer will have significantly less transaction admin associated with their purchase and as such will be able to complete the sale more quickly. Cash also carries more certainty; if proof of funds can be ascertained it is simpler than waiting for a buyer to be approved for a mortgage product or to find a means of financing their purchase. ​​​​​​​

“As cash buyers reach deeper into their pockets, spending nearly £32,000 more per purchase than before the pandemic, we are recommending that those buyers not positioned with funds at the ready to at least have a mortgage in principle agreed and as much paperwork progressed as possible. This is to ensure they are in the strongest possible position when making an offer on a property, as these steps show vendors that they are serious and able to progress quickly. Those in rental are also in a preferable position, short chains are always attractive to vendors.

“Those searching for a property to move to​​​​​​​ should ask their selling agent whether they have anything that meets their criteria across the business’ network. This will encourage a smoother process in the chain, as well as ensuring they are the first to know when a new, suitable proper​​​​​​​ty comes to market.”
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Cash is king in the South West
The strong market conditions are most acute in the South West with 23 buyers chasing each new home for sale. This in turn is creating a bounce in the amount cash buyers are willing to spend in the region, with cash buyers only achieving a 1% discount on the average price paid in the region. Here, contrary to the national landscape, cash buyers are also neck and neck with mortgage purchasers, paying only 2% less than those purchasing with a mortgage.

This is the smallest gap in t​​​​​​​he price paid by cash buyers and mortgage purchasers across England, with the national average sitting at 8% (see Graph 2). This not only demonstrates increased competition between these two buying parties in this region but also that cash buyers need to pay more on average here than anywhere else in England to secure their homes. Nat​​​​​​​ionally, cash buyers spend 95% of the average house price to secure a home, yet in the South West this figure rises to 99%. This translates to cash buyers in the South-West spend​​​​​​​ing on average £40,800 per purchase more than pre-pandemic. Graph 2: Average Cash Purchase Price vs Average Mortgage Purchase Price (September 2021)

Nick Leeming, Chairman of Jackson-Stops, comments: “The draw of the South-West is indicative of the nation’s renewed love affair with Britain’s bucolic countryside and rugged coastlines. In this region cash buyers are spending an extra £40,800 post-pandemic, with transaction volumes up 22%. This trend is particularly strong in Dorset, with our figures showing that 26 buyers are chasing every new home for sale here. This is creating upward pressure on the price cash buyers are willing to pay for their homes, with cash purchases in the area slightly pipping the region’s average house price of £301,327.”

Philip German-Ribon, Director at Jackson-Stops’ Bridport and Dorchester branch, comments: “Without a shadow of a doubt we are seeing an increase in cash buyers, and they are willing to spend more than before to secure the property they want – especially in areas with access to good schools. Stock is running at its lowest levels for years across the entire market which in turn is creating fierce competition amongst buyers.

“This unprecedented demand from buyers is an overhang of the nation’s changing property aspirations following the pandemic. Many of our buyers have released capital from their homes in London and the surrounding areas and are making their money go further in the South West, whilst also meeting a renewed desire for a coastal or remote lifestyle.

“You pretty much need to be a cash buyer or sitting in a rental property and ready to move quickly to stand a good chance of getting an offer accepted. A recent listing of ours which was priced around the £1m mark had 10 offers within days of launching, with half of these from cash buyers.”

The latest analysis from Jackson-Stops reveals that the regions with the smallest gap between cash purchase price and mortgage purchase price are the South West and the East Midlands. In these markets, cash purchasers are motivated to pay closer to the regional average house price than cash buyers do normally across the nation. On average, cash buyers spend 95% of a region’s average house price when purchasing a property, this figure rises to 99% in the South West and drops to 91% in the North West and North East of England.

Regional anaylsis
Homeowners in the South purchasing with cash in hand are spending 97% of the average house price versus 91% in the North. This is reflective of buyer demand in these parts of the country. The South East is the second most saturated market in England, second only to the South West which has a buyer vs vendor ratio of 23:1. According to Jackson-Stops’ national sales data, there are currently 17 buyers for every new listing in the South East, but this region has had the biggest increase in spend post-Covid, with cash buyers spending on average £44,100 more when purchasing their home – an increase of 14%.

The North of England has the biggest gap between cash and mortgage buyers nationally, sitting at 15% according to the latest Land Registry House Price Index. With 15 buyers for every new property listed, post-Covid cash spend is £24,900 higher yet cash buyers in this region are spending ​​​​​​​only 91% of the average house price, compared to 95% nationally. This is the lowest amount across England that cash buyers will spend as a percentage of an area’s average house price.

Crispin Harris, Director at Jackson-Stops’ Alderley Edge branch, comments: “In the simplest terms a cash buyer is o​​​​​​​ne who has money deposited in an account and has set that aside for a purchase – when you break this down there are fewer cash buyers around that purport to be! In today’s market availability to progress is what makes a purchaser attractive to a vendor.

“A good proportion of the cash buyers in our region often results in clients who have sold their home at a good price and are willing to rent in the interim so that when they can move quickly when they find their dream home. As well as having freedom of movement, they also often have cash from their previous sale in the bank ready to go. This is undeniably an attractive position to be in and certainly curries favour with vendors.”

Methodology
London was excluded from all analysis to avoid the data being skewed by the high proportion of cash buyers in this area of the country

*Comparing cash purchasers in H1 2019 vs H1 2021 across England. This is the most up to date complete data set available. Source: Land Registry House Price Index.

** Utilising Jackson-Stops’ latest sales data (September 2020 vs September 2021)

Jackson-Stops analysed new buyer registrations and new listings across the Group’s network from September 2020 – September 2021 to determine the buyer to vendor ratios. The findings were segmented by region to create the regional analysis.

Funding status statistics were taken from the Land Registry House Price Index from September 2019 to September 2021.

Transaction data was taken from the latest Land Registry House Price Index (June 2021). This is the most up to date complete data set available.