Property brand Knight Frank has looked at how different parts of the housing market have performed since inflation, mortgage pricing and interest rates increased in Spring 2022
Mortgaged buyers have continued to drive the property market even in the two years since mortgage rates peaked, according to a research.
Property brand Knight Frank has looked at how different parts of the housing market have performed since inflation, mortgage pricing and interest rates increased in Spring 2022.
Tom Bill, head of UK residential research at Knight Frank said the analysis suggests cash buyers did not have a particularly obvious impact as borrowing costs jumped for borrowers.
The research ranked all local authorities by their percentage of cash buyers in the two years to April 2024, there was only a small difference between the top and bottom of the list.
The 25 areas with the highest proportion of cash buyers experienced an average drop in sales volumes of 24% versus the two-year period to April 2019. In the 25 local authorities with the lowest ratio of cash buyers, the equivalent drop was 27%.
The highest percentage of cash buyers was in North Norfolk (60.3%) while the lowest was Barking and Dagenham (8.5%). The local authority where transactions held up best was Kensington & Chelsea (+11.3%), where 54.7% of buyers paid in cash.
Meanwhile, prices rose by an average of 1.4% in the two years to April 2024 in the top 25 areas for cash buyers while the equivalent increase was 0.9% in the bottom 25 locations.
Bill added: Despite cash buyers having the advantage, the figures underline how the tempo in residential markets is largely set by leveraged buyers.
He also suggested that stress-testing rules for mortgage borrowers introduced after the global financial crisis in 2008 seem to have done their job, underlined by the fact 77% of local authorities saw prices increase over the two-year period.
However, he says affordability remains an issue for buyers and has contributed to a decline in transactions.
