Following Rishi Sunak’s Stamp Duty Holiday, Zoopla has reported a 29% increase in visits this month and a 27% increase in agency sales over the past 14 days. This buying frenzy is in part due to the stamp duty holiday as well as the weaker sterling making it arguably the best time to buy.
With this frenzy of demand it is interesting to see who is actually in the market buying. This wave of new demand is coming from multiple fronts, and different buyers require different properties dependent on their needs.
Foreign investors are also motivated to buy, following a decision made by Johnson’s government addressing the possibility of citizenship to Hong Kong residents.
It’s becoming increasingly clear that this wave of new demand is coming from multiple fronts, and different buyers require different properties dependent on their needs. So who are the buyers, and what are they looking for?
i) First Time Buyers
First-time buyers are more excited to take their purchase plans ahead to take advantage of the zero stamp duty as this allows them to put down a higher deposit.
A survey done by the Legal & General Mortgage Club found that 35% of first-time buyers said that the pandemic has had no impact on their plans to buy.
Recent figures from the Land Registry suggest that they also gravitate towards bigger properties, skipping flats all together. This will be further reinforced with the tax cuts.
Additionally, the government is planning to extend the help-to-buy scheme, which has gained a further 13% interest from first time buyers after the pandemic. First-time-buyers are not halting their purchase but instead are more eager to take this opportunity in the current timeframe.
ii) BTL Landlords
BTL Landlords were also handed a nice surprise with the stamp duty holiday as this tax saving leaves them with more money to invest in a property. BTL landlords spend on average £588,698 in inner London and £424,172 in outer London, which lands them in the sweet spot for stamp duty for tax savings.
BTL buyers are interested in locations that yield high rentals and properties that can be easily monetised and have very low void periods.
This means they tend to gravitate towards properties near university campuses, where demand comes in abundance from international students, i.e. Euston, South Kensington, Knightsbridge; and properties that are attractive to young adults in the services industry such as Canary Wharf, Clerkenwell, Islington and Shoreditch.
BTL buyers in London average to about 7.8 properties in their portfolio, meaning that such buyers tend to buy in bulk when there’s an opportunity to get a better deal. In the current situation, it’s no surprise BTL investors are looking to get a deal for some properties as their yields remain promising.
iii) International Investors
Foreign demand represents a big portion of buyers in the UK, and much more notably in Prime Central London. International buyers purchased 44% of homes in PCL in the first half of 2019 and 58% the year before that. The tax cuts alongside a depreciated Sterling pushes such investors to make purchases now in order to appreciate their investments.
At XChange, we’ve collected data regarding international buyers. Hong Kong alone represents 28% of that demand, and now even more demand is on it’s way thanks to Johnson’s decision.
These cash rich investors look for properties that are in the £500,000 to £2 million mark, BTL investments. Also, some are families interested in upscale properties ranging from £5-£10 million in neighbourhoods with good schools like Marylebone and Regent’s Park.
Are you meeting the demand?
With all the current events in the estate market it’s good practise to ask yourself, how are you meeting this surge in demand?
With the growing demand, it is important to have a relevant property for your buyer at all times. Don’t let this be an opportunity to run out of good relevant stock.
At XChange we help ensure that you have relevant stock when you need it most. Our platform helps you meet the increased demand. We also take pride in our international buyer base, with foreign buyers that are looking for properties to purchase in the current timeframe.
Make sure you meet the demand and take control of the situation by not missing out on potential deals due to lack of stock or leads. To learn more about our platform and register, click here.
Find us in London
27 Finsbury Circus
London, EC2M 5NT
020 8064 1431