Cash still king when getting the best price on property, claims new research
GetAgent.co.uk has been crunching the numbers and found that, partly due to Brexit uncertainty, large numbers of cash buyers are quids in vs their mortgage counterparts when it comes to securing the best price on a property.
The firm looked at the average price paid by cash buyers over the last 12 months and how this compared to that paid by buyers funded via a mortgage to see what the difference was and how this varied regionally across the UK.
The data shows that across the UK the current average price paid by cash buyers over the last year is £220,100, -9% cheaper than the average price paid by buyers with a mortgage (£240,758).
This gap is the highest in the North East and North West, where properties bought with cash go for -12% less, while London is the only region where cash will cost you more, 6% more than the average price paid by a mortgage buyer.
Falkirk is home to the best cash bargains in Britain with cash sales seeing a -24% discount compared to mortgage funded purchases. North Lanarkshire and Renfrewshire (-21%) are also home to some of the biggest differences, with Hartlepool seeing the biggest cash discount in England at (-21%).
The Isle of Anglesey is home to the highest cash property price when compared to mortgage prices coming in 11% higher, with the Western Isles and Breckland also amongst the highest prices paid when comparing cash to a mortgage.
In London, Sutton is the best borough for a cash buyer with an average price of £346,516 compared to £382,100 – a -9% reduction.
Redbridge, Enfield. Bexley and Harrow also rank high for cash discounts, while Merton is home to an average cash property price some 7% higher than the average mortgage purchase price, along with Westminster.
Colby Short, founder and CEO of GetAgent.co.uk, commented: “Cash is always king when it comes to pretty much any transaction and this doesn’t change just because you’re buying a house. In fact, it becomes even more pertinent.
“Cash buyers are preferable to many sellers because they provide a much simpler transaction with fewer hoops to jump through and often come without a complicated chain. The flip side of this convenience is that cash buyers have a far stronger position when it comes to negotiations and often sellers will accept a more sizeable reduction for the speed and convenience of a cash sale.
“While this is nothing new, it has become more prevalent in recent times due to a few factors.
“Brexit uncertainty over the last year has left many on the fence and so those that are looking to sell have had to do so with a lower price expectation due to a dwindling level of buyer interest. Therefore, finding the golden ticket of a cash buyer with honest intentions in a market slowdown has prompted an even greater tendency to sell with a greater cash discount in order to get a sale over the line.
“At the other end of the transaction scale, the continued affordability of borrowing money due to low-interest rates has seen many aspirational buyers commit to a greater sum than they may have otherwise.
“Of course, the cat and mouse game of a lower bid during the offer stage happens regardless of how a buyer may be funded, but with mortgage buyers already starting at a higher price point in terms of the sum they’ve been approved for, the final price paid has been greater than it may have been in different circumstances.”