UK property investment on the rise in fast-paced market

 

A record number of property buyers are currently chain-free, indicating a surge in UK property investment as well as first-time buyer activity.

The current conditions in the UK housing market – record numbers of buyers competing over low levels of property stock – mean that chain-free purchases are more sought after than ever.

New research from Hamptons shows how this is reflected in the transactions seen so far this year, with 61% of sellers accepting an offer from a chain-free buyer over a buyer with a property to sell. This is up from an average 59% in 2021 and 58% in pre-Covid 2019.

Sellers are often willing to accept a lower price from a chain-free buyer, too, lured by the prospect of a more straightforward sale. Hamptons found that, one average, sellers are currently accepting offers of around 2.5% less from chain-free purchasers.

UK property investment on the rise

Hamptons notes that the increase in the ability of buyers to purchase chain-free is down to a combination of both first-time buyers and property investors.

The data shows that, over the past four months, investors made up 14% of buyers, an increase from the 12% recorded in 2021. Meanwhile, first-time buyer numbers are at a record high, making up 26% of all purchases so far this year, compared to 24% in 2021.

The rise in the number of UK property investment transactions is countered by a notable fall in owner-occupier sales. Many downsizers in particular are selling their homes before making a cash purchase. Growing numbers of movers are moving into rental homes temporarily to break the chain.

These figures are supported by recent research, also by Hamptons, showing that buy-to-let landlords have been the most active in the market since 2016. In the first three months of the year, 13.9% of properties sold were bought by buy-to-let landlords.

Overall, landlords bought 42,980 homes in Great Britain during the first quarter of 2022. This equates to £8.5bn worth of property, which is nearly twice the figure recorded pre-Covidin the first quarter of 2019.

Fast-paced market creating competition

Aneisha Beveridge, head of research at Hamptons, said: “The current pace of the market has put buyers with a home to sell at the back of the queue. In a fast-paced market such as today, over three-quarters of sellers had multiple offers on the table to choose from.

“And given chain-free buyers tend to complete quicker and sales are less likely to fall through, they are fast becoming the preferred option for sellers.”

The picture is relatively varied across the country, though. Both the north east and London have experienced dips in the number of chain-free property transactions since the start of this year. The report states that there are fewer offers on the table to choose from in these areas.

However, in all other regions, there was an overall increase in chain-free property purchases. The West Midlands accounted for the highest levels, which could coincide with the region becoming an increasingly popular hotspot for UK property investment.

Exacerbating supply issues

While the UK property investment landscape remains healthy with a high level of appetite, Aneisha Beveridge points out that the fact people are buying without property to sell could be adding to supply shortages.

She notes: “Chains serve an important role in the market, helping people move up and down the housing ladder. And it’s second and third steppers alongside downsizers who rely on the capital raised from the sale of their home for their next purchase who are finding it particularly tough.

“This is also exacerbating the lack of stock given their homes are increasingly being bought by first-time buyers and investors who do not have a property to sell.

“Roughly speaking, for every ten tomes sold so far in 2022 only three of those buyers will bring a home onto the market to sell, creating a chain.”

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UK property investment on the rise in fast-paced market

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