Cash buyers have always secured a discount in the UK property market, but recent trends and an accelerating demand for housing are leading to even better deals for many.
The UK property market continued to gain momentum towards the end of 2024, with a steep rise in the number of transactions alongside monthly and annual house price hikes across much of the country.
At the same time, mortgage rates did not fall at the rate that many had hoped, while the Bank of England base rate was held once more at the end of the year at 4.75%, having dropped from its long-term high of 5.25%. While analysts are optimistic that rates will fall during 2025, buyers are nevertheless continuing to demonstrate an eagerness to push ahead with purchases.
But for those in a position to buy without a mortgage – whether they be homeowners or buy-to-let property investors – great savings can be made through both the discount sellers are willing to offer a cash buyer, as well as the absence of any borrowing costs and mortgage fees.
New research has revealed that the acceleration of the UK property market has coincided with greater discounts being secured by cash buyers. The analysis from MPowered Mortgages found that cash buyers are now paying an average of £28,189 less than a mortgaged buyer on the equivalent home – which is an average of 9.3% off the price.
UK property discounts across the regions
Not all parts of the country are equal when it comes to how much sellers are willing to drop the price for a cash offer, and this partly comes down to affordability and property prices.
The North West is the region where cash buyers appear to be the most sought after in the UK property market. If you can buy a property there without a mortgage, you could get as much as 13.4% off the average price – the equivalent of £31,827.
Property prices have also been rising at the fastest rate in the North West according to some indices, indicating a heightened demand for homes in the region. This is widely expected to continue, with Savills forecasting the strongest price growth of all UK regions in the North West.
Cash buyers also get the best deals in Scotland with an average 12.8% discount, followed by the North East with 12.4%. Hovering in the middle are East Anglia (7.8%), Yorkshire and the Humber (7.7%), West Midlands (7.4%), and South East (7.2%). Smaller discounts are seen in the East Midlands (6.4%), Wales (5%) and the South West (3.8%).
London is the only section of the UK property market where cash buyers actually pay more than mortgaged once (at -3%). MPowered Mortgages puts this down to the larger number of foreign property investors buying homes with cash in the capital, which tend to be at the top end of the market and therefore skew the figures.
Paying for speed
There are pros and cons to being a cash buyer, and indeed to accepting an offer from someone who intends to pay with cash.
For the buyer, of course, there is the prospect of securing a cheaper price, as well as avoiding mortgage costs; while speed and efficiency can also be a benefit. However, for property investors in particular, a downside can be that your cash loses its liquidity once it is tied up in a property, which can also make it harder to diversify if you lack the cash to reinvest.
On the seller side, the benefit of speed and efficiency also applies, so it is especially appealing when seeking a quick sale. Particularly as affordability continues to be a sticking point in the UK property market for many borrowers, sales may be more likely to fall through where a buyer’s mortgage application fails.
Stuart Cheetham, CEO of MPowered Mortgages, said: “Two factors explain the power cash buyers have to pay less for the home they want – scarcity and speed.
“As the property market heats up and interest rates fall, the number of househunters using a mortgage to fund their purchase is surging and cash buyers are becoming relatively rarer.
“Then there’s the trump card that cash buyers can play – speed. Rising demand is making a slow process take even longer, and the average seller in England and Wales now has to wait 152 days between accepting an offer and completing their sale.
“That’s why buyers who have their finance fully in place when making an offer are vastly more proceedable – i.e. attractive to sellers – than those who don’t. Sellers will often accept a lower offer in return for the extra certainty these buyers represent.
“If you’re not fortunate enough to have the money to buy the home you want outright, you can give yourself almost the same leverage by having a fully underwritten mortgage offer.”
If you’re looking to invest in UK property in 2025, get in touch with BuyAssociation today and find out more about our current and upcoming UK property investment opportunities.
